Queensland

Parliamentary Debates [Hansard]

Legislative Assembly

FRIDAY, 23 JUNE 1893

Electronic reproduction of original hardcopy

116 Queensland National Bank [ASSEMBLY.] Agreement Bill.

LEGISLATIVE ASSEMBLY.

Friday, 23 June, 1893.

Breach o! Standing Orders.-Queensland National B•mk Agreement Bill: Committee.-Public Depositors' Relief Bill: Second reading.-Adjournment.

The SPEAKER took the chair at half-past 3 o'clock.

BREACH OF i:lTANDING ORDERS. Mr. HOOLAN : Before we go on with

Government business, there is a little matter I want to call attention to which occurred at the conclusion of the debate last night. I intended to have challenged the votes of certain hon. members under Standing Order No. 152, and also under a clause of the Companies Act, which is very stringent. However, I did not do so, partly from motives of courtesy. I thought hon. members who were pecuniarily and directly interested in the matter under discussion would have had the grace and courtesy, knowing that there would be a majority without them, to leave the Assembly. Certain hon. members who are greatly interested did leave, but they belong tu this side of the House. This is not a mere trespass on the Standing Orders, but a flagrant breach of them, one which might perhaps IJe excused or tolerated if it had occurred among"t the Labour party, but which is inexcusable when coming from the Government side. These Rules and Orders are for the guidance of all of us in debate, and there is no one more willing to adhere to them firmly ·on every occasion than I am, and I expect the very same conduct from every other member of the House. My short experi­ence here has shown me the imperative necessity of good conduct and strict adherence to the rules laid down for the guidance of the House. But these rules were grossly violated last night by those members who voted against the Stand· ing Order in which it is imperatively laid down that no member shall vote on any question in which he has a direct pecuniary interest, and I now call your attention to the matter, Mr. Speaker.

The PREMIER (Hon. Sir T. Mcilwraith) : The hon. member is entiraly out of order in making the speech he has done. Standing Order 152 provides very differently from what he suggest~. It states that "A member shall not be entitled to vote in the House or in a com­mittee upon any question in which he has a direct pecuniary interest, and the vote of any member so intere,ted shall be disallowed." If, as the hon. member stated, that rule has been violated, the remedy was in his own hands; he should have moved at the time that the votes of certain members should not be counted. But to make a reflection afterwards goes for nothing, and it is entirely out of order to bring the matter bef<>re the House in this way.

The SPEAKER: The hon. member was entirely out of order; but I thought he would probably conclude with a motion, and therefore allowed him to speak.

QUEENSLAND NATIONAL BANK AGREEMENT BILL.

COYMITT:B;E.

Preamble postponed. Clause 1 put and passed. Clause 2 passed with the following additional

interpretation :- " 'Treasurer'- the Colonial Treasurer of Queensland."

On clause 3, which had been verbally amended toread-

H It shall be lawful for the Treasurer to enter into an agreement, on behalf of the Government, with the bank, whereby the p<tyment of the said sums due to the Government by the bank may be deferred, as hereinafter provided."

Mr. POWERS said he had given notice of an amendment, but he would not delay the Com­mittee beyond trying to answer the arguments that had been used against it, because after the debate on the second reading and the comment; on it in the Press, most hon. members must have made up their minds as to how they would vote upon it. Three arguments were raised against it-the first by the Secretary for Lands, who said it would be better to have the money in the bank than to have it available at the next election for election purposes. But the money would not be available at the next general election if it was reserved. Before that time there would have to come out of it the repayment of a loan of £750,000, which would have to be paid either out of that money or out of a new loan, judging from the present appearance of the colony; and at least a similar sum ought to be kept in hand for the purposes of the Government Savings Bank and trust funds. That would practically take up half the money; and surely the remainder could be judiciously expended upon public works in the interests of the country. Their indebtedness would be decreased, public works commenced, and none of the money would be avail­able for the electioneering purposes mentioned. The other objection was that the proposal was in the shape of a "kite," and the last person who should have made such a suggestion was the Secretary for Lands, because that hon. gentle­man had assured them that the security upon which it was proposed to issue the debentures was perfectly sound. That was hardly treating the proposal fairly, and, though the hon. member possibly spoke in a joking way, the Press had taken the statement seriously, and he hoped hon. members would not do so. The next objection raised by the Treasurer was that if the money had to be borrowed he would rather borrow it himself. That was an argu­ment founded upon an opinion ; but he con­tended that as it was the bank's debt, the bank should make the arrangements for borrowing the money to pay it.

The COLONIAL TREASURER (Hon. H. JIII. Nelson) : At 4~ per cent. ?

Mr. POWERS : At whatever rate they could get it.

The COLONIAL THEASURER : And we are to guarantee it?

Mr. POWERS : They had already guaran­teed it, as they had placed the money with the bank, and they would be in no worse posi­tion under his proposal in that respect. He hoped there would be no necessity for the guarantee, and that the bank would in a short time be able to issue debentures for £2,000,000; but if it was found to be necessary, the GoYern­ment should be authorised to guarantee the issue. Another objection raised by the Premier was that the proposal would mean a delay in the settlement of the scheme, and that was not wished. He had no desire to cause delay, and if the wording of the proposal would have that effect it would be easy to amend it so as to provide that the bank should say at once whether they could issue the debentures ; if they could, so much the better; if they could not, the scheme of reconstruction could go on without delay. The amount received would be reduced by £750,000, as he h<td pointed out, and the balance could be placed on deposit in the other banks at interest until it was required for

Queenstanrl National Bank [23 JUNE.] .Ag1•eement Bill. 117

progressive works. He had no wish to do any electioneering, but he was sure the Secretary for Lands and other members of the Government knew that there were works which could be carried on, upon which 4 per cent. could be guaranteed. He took the action he was taking in the interests of the colony, to prevent, if pos­sible, the locking up of the money for a long terin of years. He moved the insertion of the follow­ing after the word "deferred " :-

" For six months from the first day of July, one thousand eight hundred and nineLy-three, to enable the bank to issue and dispose of a sufficient number of debentures or other stock, bearing interest at a rate not exceeding four and a-half per cen turn per annum, to realise the amount at present due to the Govern­ment by the bank in three equal yearly instalments.

"And that it shall be lawful for the Treasurer, on behalf of the Government, to guarantee the payment o! such debentures or stock, provided they are made pay­able not less than s1x years and not more than twelve years from the fil'St day of July, one thousand eight hundred and ninety-three.

" Provided always that if the said bank, on or after the first day of Xovemberj one thottsand eight hundred and ninety-three, declares its inability to raise the amount of the money due to the Government by the issue of debentures or other preferential stock, then it shall be lawful for the Treasurer at any time after the first day of November next to enter into an agreement, on behal! of the Government, with the bank whereby the payment of the money due to the Government by the bank may be deferred."

The COLONIAL TREASURER said he could not accept the amendment. It was un-

. workable, and he had an instinctive objection to the Government becoming guarantor~. If the Government were to guarantee the debentures of the bank, it would be the first attempt to depreciate the credit of the Government in the home market. It suggested that the Govern­ment were reduced to such a state that, though they had debts due to them, they should guarantee the debentures of a financial institution at 4/i per cent., while their own debentures had been carrying interest for a number of years back at only 3li per cent. There was nothing in the amendment to compel the bank to adopt the course suggested, and it was out of the scope of of the Bill, the intention of which was to limit the Treasurer in tha extent to which he might go in making an agreement with the bank. It did not define everything that the Treasurer could do, but simply what were the limits within which he should act. There were serious objections to the amendment, and he hoped the Committee would look upon it in that light.

The SECRETARY FOR LANDS was sorry that the hon. member for Maryborough took exception to his use of the word ''kite," but that was the only word that really expressed the nature of the transaction proposed. A "kite" was a bill which was not a genuine commercial transaction, but rested simply upon the unhypothecated responsibility of the persons who entered into the agreement. It was quite impossible that any great portion of the bank's assets could be speci­fically hypothecated, and that was why he had used the word. The amendment wae nothing more or less than an attempt to fly a kite with Government twine. It invited them to try to do something, and if that did not succeed before the 1st of IS ovember, 1893, they were then to come back to what was provided in the Bill. The Treasurer was to be obliged to endorse the paper of the bank, and to guarantee the interest at a higher rate than was paid upon the Government stock, thereby depreciating their own debentures. He could not support such an amendment,

Mr. HOOLAN said that the amendment was merely to enable the bank to do business that was now thrust upon the Government, and which the Government appeared eager to do.

They had placed a large sum in the bank, and they did not know whether they would ever get a shilling of it. The amendment provided that the bank should bear the responsibility for them­selves, and endeavour t0 release that £2,000,000 within a reasonable time. If the as~etB of the bank were as sound as the Treasurer stated, there should be no objection to the amendment. .It was agreed that the colony and the bank were both solvent, and that the bank was over­burdened both with assets and liabilities, and as it was reported that the bank was calling in some of the overdrawn accounts, it should also liquidate its debts immediately. The Go­vernment were in the fortunate position of being in credit ; yet the Government were the first to renounce their position. By refusing to accept the amendment they virtually contradicted their assertion that the bank was in a sound condition. The assets were undoubtedly large, but some of them were worthless, and the action of the Go­vernment did not tend to increase their value. If the Government were not afraid of the value of the assets, or of something else connected with the Queensland National Bank, they would have accepted the amendment at once.

The PREMIER said that the hon. member for Maryborough should have reminded the Committee that the amendment was quite dif­ferent from what he had suggested in his speech, which had evoked the answers made against it, and which answers he had himself answered. He understood the hon. member to propose that the assets should be scheduled, and that certain money should be borrowed by debentures to be backed by the Government. It would be a most objectionable thing to schedule the bank's assets, and to borrow on them, becausr. on the face ot it it made other preferential creditors besides the Government. He gave credit to the hon. gentleman for seeing that, because he cleverly evaded putting it into his amendment. Thehon. member endorsed the argument of the hon. member for Burke, that the Government by tl1eir opposition to the amendment expressed their want of confidence in the safety of the bank-by declining to guarantee their bills. That was not the position at all. The Go.vernment declined to raise money by guaranteeing the bills of any bank when they could borrow on much better conditions themselves. Why should they go in a round­about way to get money from the British public by guaranteeing the bills of a bank when they could get it by stating honestly and fairly the purposes for which the money was wanted? They did not improve the position by endorsing the bills of a bank. That was a transaction the British money-lender would not under­stand, or would put a wrong construction upon, If the Government endorsed the bills of the Queensland National Bank it might induce the suspicion that there were some other guarantees given by the Government that they had for­gotten. It was an unsafe business for a Govern­ment to go into, and a business the public would not believe in. The hon. member wanted to make the money available in three years. Did he not know it was perfectly available within three years if they liked to make it so? They could put before the whole world that they had £2,000,000 deposited on certain security; they would have the same deposit receipts as other people, and if they wanted to finance with them, either in the way of paying their debts in the shape of interest or by constructing public works, they had that additional asset to put before people at home. Why should they hamper themselves by making a condition actually declaring to the world that they were willing to raise money by endorsing bills of a bank at 4li per cent. when they could borrow money themselves at3~ per cent.? That would be

118 Queensland National Banlc [ASSEMBLY.] Agreement Bill.

a stupid arrangement, and did not bear the test of business capacity at all. Of course, vary as they liked the intention of the amend­ment, it amounted after all simply to the idea of putting the Government in posses­sion of two millions of money now. \Vhen the Government wanted that money, and could see their way safely to raise it, and when it was in the interests of the public that it should be raised, they would adopt the proper steps to do it. But it would be a most indiscreet thin&" to come forward now and accept a proposal which actually put them in a bad position, and which was a simple confession that they were in a worse position than either he or the hon. member for Maryborough believed.

Mr. POWERS said the hon. gentleman argued altogether upon the point that the amendment insisted upon the Government guaranteeing the bank's debts ; but it did nothing of the sort. It said to the bank, " Borrow the money you owe at your own expense." They were told the Queensland National Bank was in a sound posi­tion, and if other banks could borrow on deben­tures, as they had done, what was to prevent the Queensland National Bank from borrowing with a guarantee? He had put in the guarantee because it might be said, "You know very well the bank could not do it." According to the hon. gentleman, the Government were going to borrow on the assets of the country and those deposits.

The PRl!jMIER: I said that if it was for the good of the country we would propose to Parlia­ment to allow us to borrow.

Mr. POWERS: What would be the result of that? They had lost something like .£1,500,000 on the floating of their loans. If the bank borrowed, the loss, if any, would fall on the bank. On the .£10,000,000 loan they lost .£350,000, and on the last loan .£140,000, and they did not want to lose another £250,000 at the expense of the State. If the necessities of the Government were so great, let the borrowing be done by those who owed. the money, and let the bank have the loss. He had fixed the rate at 4~ per cent. because if the bank could not raise the money at 3~ per cent. it could· at 4 or 4~ per cent. That was the bank's own proposal, and not his. He did not believe any Treasurer, unless the necessities of the colony were very great, would guarantee at the rate of 4~ per cent. It was put in as an outside limit, only to be adopted if the depression continued. If the Government were going to borrow at the same cost as was the case with the last loan, £250,000 would be lost to the State. It was not desirable to lose when the loss should fall on the bank.

Mr. STEVENS thought the hon. member for Maryborough had forgotten the last part of the amendment. The State was not likelv to raise money for the bank, to say nothing for or against the question of the Government borrowing through the bank. The object of the amend­ment was said to be that money should be raised in order that it might be expended in the colony in a short time; but it would have been better to have brought forward a motion td that effPct and divide the House upon it than to have brouo-ht it forward in this way. If it had been brought forward by motion the Government would have had either to take steps to raise the money, or else act in defiance of the express wish of the House. He was inclined to support the amendment at first, but could not see his way to do so now.

The ATTORNEY-GENERAL (Hon. T. J. Byrnes) thought the hon. member for Mary­borough had taken an extreme position. The Treasurer had pointed out what would be th'l

effect of embodying a guarantee, and yet if the guarantee were taken out of the amendment there would be nothinrt left, except that instead of being an enabling Bill it would be a disabl!ng Bill ; it would prevent t):te Treasurer entermg into an agreement for SlX months. The hem. members for Maryborough and Burke were loud in· their protestations that the current accounts should be set free ; but if the Government took all the money out of the bank, what would be left for other people? If the Government did that they could well be cliaracterised as political Shy locks.

Mr. POWERS reminded the Government that his proposal was that they shoul.d adva':ce half of the depoo<its by Treasury brlls whwh would be legal tender for six years, as had been done in New South Wales. If the Government believed in the soundness of the bank there could be no harm in the guarantee, and there would be no difficulty in raising money by debentures.

Mr. HOOLAN considered twelve years was a very long time to allow, and certainly a sou~d bank with large assets should be able to meet rts en!'agements at an earlier P.eriod. No o~her business man than the Premter would consrder that having .£2,000,000 in the bank would enable them to gain prestige in ~he eyes of .t!re world. If they wished to re-establish the stabrhty of the bank, they had better adopt the amendment which would restore the confidence of the investors and the bank's creditors. The bank could raise money upon its assets, and the Govern­ment would merely guarantee the amount. No confidence could be restored without a guarantee. They were deeply immersed in the affairs. of the Queensland National Bank, and they m1ght as well o-o a step further and guarantee the deben­turesbof that bank. If they sold their debentures the money would come into the Tr~asu_ry. The Bill released the bank from any obhgatron ; but the amendment would, in a measure, safeguard the interests of the taxpayers.

The HoN. J. R. DICKSON said he was at first attracted to the idea of releasing the Go­vernment fund by the issue of debentures, but after careful consideration he had come to the conclusion that the proposal was impracticable and undesirable. If the amendment were in­troduced there would be great uncertainty attending the reconstruction of the bank until it was known whether the pr0posal could be acted upon or not. At the time the hon. mem­ber for Maryborough suggested the idea he said nothing about a guarantee by the Government, and that altered the whole complexion of the case. The adoption of tl1is proposal would inspire mistrust in the minds of foreign creditors particularly, and would also give rise to the feeling that it might be the thin end of the wedge to introduce further borrowing by the State. It was their duty to assist the Govern­ment in their endeavour to enable the bank to be revived at the earliest possible moment; and he could not see that the security of the Govern­ment fund would be increased by adopting the hon. member's suggestion. In issuing debentures certain assets of the bank would have to be ear­marked or pledged as against those debentures, and that would be undesirable ; the only alterna­tive would be to issue preferential shares, but that was a matter for the directors to con­sider. No doubt when the financial atmos­phere was somewhat clearer the bank would desire an accession of capital, and when money became cheaper the bank might feel desirous of paying off the Government account at an earlier period than that now contemplated. He did not look upon the Bill merely as a tem­porary measure to tide over present difficulties, but as one which would give the bank substantial

Queensland National Banlc [23 JuNE.] Agreement Bill. 119

facility in regard to futur operations. The position of the Government would remain the same during the course of the agreement, and the scheme would be much less complicated by retaining the Bill in its present shape. If it were sought to obtain a Government guarantee for the debentures it would be most unwise to give it, while without it the scheme was impracticable.

Mr. MORGAN said the hon. member for Bulimba seemed particularly desirous that the Commit~ee should deal tenderly with the bank. He (Mr. Morgan) thought they should deal as tenderly with the bank as the public interests would permit; but they must consider the public interest~ first. The hon. member warned the Committee that the amendment would create distrust in the minds of the foreign creditors of the bank. That distrust was created, and the present crisis was the result of that distrust. It appeared to him that there was a deal more to be said in favour of the amendment than had been admitted either by the Treasurer or the Premier. The great objection to it was that it would cause delay in bringing about the restoration of com­merce. The Treasurer objected to the propos<tl on the ground that it would cause him to back bills for circulation abroad, and in that way depreciate the crerlit of the country. But the country would really suffer less fro::n the circula­tion in London of bills issued by the Queensland National Bank with a Government guarantee than it would from the Government attempting to borrow from English investors, and having to admit that money lent to tbe colony years ago was still in the bank and could not be extricated. There was no doubt that if that money could be released, not necessarily with the object of spending it immediately, but with a view to make it a liquid asset which could be realised at any time, confidence would be greatly re­stored and an impetus given to trade. The judicious expenditure of it in small sums would place the suspended banks, more par­ticularly the Queensland National Bank, in a far better position to meet their liabilities to the general creditors than they would be in if the bank was compelled to accept the scheme of that Bill as it stood, and to pa.y the Govern­ment 4~ per cent. on the .£2,360,000 or any p11.rt of it. It was deeply to be regretted that some such scheme as that proposed by the hon. mem­ber for Maryborough was not embodied in the Bill. Though he (Mr. Morgan) was prepared to admit tha,t there were grave objections to it, he did not think the Treasurer or the hon. member for Bulimba had done justice to the principle of the amendment.

Mr. DA WSON thought the amendment had had one good result in giving the Committee an inkling of the mind of the Government. The Treasurer, and every member on that side who had spoken on the subject, objected to the amendment because it provided for a Govern­ment guarantee. He would therefore suggest to the hon. member for Maryborough that he should withdraw that part of his amendment relating to the Government guarantee. The rest would then, if the criticisms of hon. members opposite were sincere, receive their unanimous support.

The ATTORNEY-GENERAL: What is there in the amendment besides the guarantee?

Mr. DA WSON: It provided that the money owing to the Government by the Queensland National Bank should be paid in three years.

The ATTORNEY-GENERAL: No. Mr. DA WSON : That was the way he and

other members read it, and the Premier had practically admitted the same thing when he said the Government could now get the money

in three years if they wanted it. He (Mr. Dawson) contended that those who held the money should do their own borrowing, and if it was correct that the bank was in a perfectly sound condition, it should be able to borrow on its own credit without any Government guarantee.

Mr. LEAHY said that when he first read the amendment he viewed it with favour, but,, having studied it very carefully since, he was not now of the same opinion with respect to it. It was not shown that the Queensland National Bank could borrow the money at the present time except at a long way below par ; nor was there anything in the amendment to compel the bank to issue the proposed debentures. The effect of the proposal would simply be to delay the fixing up of the bank for six months, which would be ruinous to the bank and to many members of the community. If the bank were to borrow money at the price of the last Government loan, it would be about £250,000 short, and it would not be the shareholders of the bank who would lose that money, but the customers of the bank who would have to make it good in some shape or other. But even if the bank could borrow the money, the Treasurer had stated he had no intention to use it immediately, so that nothing would be gained by it.

Mr. FISHER said the acceptance of the amendment would give the bank an opportunity of realising the Government funds at a shorter date than that fixed by the Bill, and do away with the neceiosity of the Government going again to the English money market for a loan. If the position of the bank was as sound as it was stated to be it could easily raise the money. It would also give the directors of the bank an opportunity of publicly refuting the asroertion of people outside that the bank was unable to meet its engagements. As to the statement that the Government did not want the money, it was very strange that whenever a deputation waited upon the Premier to ask for assistance they were always told there was no money in the Treasury. If the Government had plenty of money, it was a happy position to be in, even though they could not get any of it.

Mr. KINGSBURY said that when a man like the hon. member for Maryborough, who professed to have a knowledge of finance, proved by his figures and statements that he was utterly unreliable when he c:tme to deal with some particular question of finance, he was inclined to doubt all his deliverances upon financial questions. The hon. member had repeatedly told the Committee that the Govern­ment had floated loans at a loss. The fact was that the Government had never floated a loan at a loss, as anybody who knew anything about monetary matters or banking would understand. They had always floated the loans at their actual market value.

HoNOURABLE MEiiiBERS of the Opposition : Oh, oh!

Mr. KINGSBURY: Hon. members opposite said they had no interest in banks and knew nothing of finance, and he was inclined to believe them. Their 4 per cent. loans were at par, but if they went to the English market and said they would only give 31;, those who lent the money would capitalise the !; per cent. and take it out of the money sent out here at the beginning instead of year by year. The interest capitalised in that way was called a loss by the financial junior member for Maryborough.

Mr. POWERS: And by the Auditor-Genera!,

i20 Queensland National Bank [ASSEMBLY.] Agreement Bill.

Mr. KINGS BURY: The hon. member had really suggested a method of making a big profit out of these loans. Let them float a loan at 7 per cent. for £1,000,000, and that would bring them, on the same basis, £1,750,000, so that they would have £750,000, to the good. '.rhey could put the £1,000,000 by, and though they would of course have to pay 7 per cent. interest per annum, that would not matter, and they could congratulate themselves, on the hon. member's argument, upon havmg mad" a profit of £730,000. Really the hon. member had shown a splendid method of financing all their difficulties in the future, and all they had now to do was to float their future loans at a sufficiently high rate of interest to enable them to pay off the national debt. Taking a serious view of the amendment, its result would certainly be liqui­dation. If the English depositors found that they were asked to wait six months to ascertain whether the bank could sell its debentures or not, they could and would force the bank into liquidation. That would mean the closing of half the factories, foundries, and businesses in Queensland. It would mean a magnificent acces­sion to the Labour party in the unemployed divi­sion, and would throw Queensland back another half century. It was their duty to themselves and to the English depositors not to insist upon their pound of flesh. If they did insist upon it the bank would be put into liquidation, and then woe be to Queensland.

Mr. LEAHY said that whether the hon. mem­ber was a better authority upon such subjects than the Auditor-General he did not know, but the Auditor-General spoke of the floating of a loan of £2,443,750 as im·olving a loss of over £299,000.

Mr. KINGSBURY : That is capitalised interest.

Mr. POWERS said that if the Queensland National Bank went to England and floated a loan for £2,000,000, and only got for it £1,500,000, that would involve a loss of £500,000. If they went to London for money, no matter what rate of interest was paid, and only got £87 for £100, it meant a loss of £13 in every £100.

Mr. DALRYMPLE: You want to gain both ways. Pay less interest, and get more for your loan.

Mr. POWERS : The value of the money was its value at the time the loan was floated, and if they floated a loan at 41 per cent., and only got £90 for £100, that meant a loss of £10 per £100. Notwithstanding the high financial ability of the junior member for N urth Brisbane, he did not defer to that hon. member while he had the Auditor-General on his side. That officer's report stated the loss on all their loans; that they were now responsible for £30,000,000, and while they had to pay interest on the full snm they had only received £28,500,000.

Mr. SMYTH thought the junior member for North Brisbane had the right end of the stick. They had a loan falling clue shortly for which they were paying 6 per cent., and if they asked for the renewal of that loan at fi per cent. they should get £100 for it, according to the argument of the hon. member for Maryborou!<h. A layman required a very small knowledge of financial matters to know that the higher the rate of interest offered the higher the price they got for their loans. Therewasnoregularstandard, though the financial position ofthecountryfloatmg a loan, of course, affected its price. In the case of Russian and South American loans, where they had rotten securities, they only got £GO for the £100. It was not for them to go into the market to assist the Queensland National Bank to float debentures to pay off £1,000,000 of

their money to carry out the work8 for which it was intended. The money of the £10,000,000 loan was nearly all earmarked for works which had never been carried out. If the Bill passed, the Queensland National Bank would have to do its best to obtain money in Great Britain, and would be only too glad to borrow at 4 per cent. to pay off its creditors, to whom it was paying 4~ per cent. As to the Government being asked to back the bills of the bank, if hon. mPmbers opposite had ever backed a bill they mmt have paid dearly for it, as it was better to advance the monP.y at once than to become security for it.

Mr. LEAKY, replying to the remarks of the hon. member for Brisbane North, said that he and the hon. member for Maryborough had referred to the losses on loam in the ordinary acceptation of the term, and in the way in which it was m.ed by the Auditor-General. Any schoolboy knew what the hon. member for Gym pie had said. They had all been right from different points of Yiew, and he did not wish to figure. in public as having been sat upon when he was nght.

Mr. HOOLAN said the hon. member for Bris­bane North had said that the amendment would defeat the object of the Bill, and that the Labour contingPnt would be amongst the unemployed. Some of the Labour members had been among the unemployed before, and if they were ever in the same category again they would never attempt to earn their living by selling eewing machines on the time-payment system. Members of the Labour party had never pretended to any special knowledge of banking, bnt a number of leading colonial bankers had served their time gaining a knowledge of banking, and they were now in gaol gaining a knowledge of that institution.

Mr. HARDAORE said the argument of the hon. member for Brisbane North was simply absurd. It was quite true that the rate of in­terest paid upon their debentures had something to do with the question. He had the authority of the Auditor-General when he said that in addition to the loss on a loan by the price realised, there were other expenseo to be met. The charges on the £2,500,000 loan of 1890 had actually amounted to £35,254. It might be true that the last 3!, per cent. loan floated at about £86 was equal to 4 per cent. at par; but the hon. member for Brisbane North had forgotten that when the loan fell due they would have to pay £100 for every £86 they had received. And that would mean ultimately that they had paid 5 or 6 per cent. According to the last report of the Auditor­General, the public debt was £29,457,134, whilst they had only received £27,704,587. There was a loss of £1,753,000. They would have to pay back that money which they had never received, as well as pay interest on what they had received. That was the principal loss, which the junior member for North Brisbane had forgotten in his calculations. He was surprised that a member who profeesed to understand finance should make such an absurd mistake. If there was to be a loan floated, it should be floated at the expeme of the bank. The amount which they would have to meet before the expira­tion of this Parliament was not merely £765,000, but rather over £2,000,000. They had to meet the £765,000 loan falling due in 1895, and, in addition, two sets of Trea­sury bills amounting to more than a million. ·where was that to come from unless they got the money from the Queensland National Bank, or borrowed at an enormous sacrifice? It was the duty of Parliament to save the country from that enormous expense by adoptin15 the amend­ment. If 4~ per cent. was too high a rate of

Queensland National Bank (23 JUNE.) A.g?·eement Bill. 121

interest, then make it smaller. Surely, with the assets of the bank and the guarantee of the Government, they could float a loan at 3! per cent. The amendment was very reasonable, and he should vote for it.

Mr. J ACKSON said he was not going to make a speech on the question before the Committee, but would like to read a quotation from Pro­fessor C. F. Bastable, LL.D., profegsor of poli­tical economy in the University of Dublin, on public finance. [The hon. member then read an extract showing the advantages of issuing stock at par.]

The HoN. J. R. DICKSON said although the writer to whom the hon. member referred might .approve of stock being sold either at par or a premium, yet actual experience was that discount stocks were much preferred to stocks which commanded a premium.

Mr. POWERS said those who preferred low stock were the lenders.

Mr. HOOLAN said experience proved that if a good thing was offered to the public it was always accepted, and a bad thing surrounded by good appearances was often accepted. No hard-and­fast rule could be laid down. If they could make the public believe that another portionofthepublic had confidence in a certain thing it was accepted directly. 'l'he hon. member for Maryborough proposed that the Government should back the bills of the Queensland N atbnal Bank. If the bills were good the Government would back them, and if they were bad the Government would refuse to do so. The question really was whether the Government were willing to back the bills of the bank or not.

Question-That the words proposed to be in­serted be so inserted-put; and the Committee divided:-

.A.us, 18.

::M:essrs. Fisher, ~fcDonald, Hoolan, Reid, Kerr, King, Hardacre, Dunsford, Jackt:on, Browne, Turley, Groom, Cross, Rawlings, Daniels, Dawson, Lovejoy, and Powers.

:NOE~1 36.

Sir T. 1-fcllwraith, Messrs. N8Ison, Byrnes, Armstrong, Philp, Barlow, Dickson, Cribb, Thorn, Chataway, Tooth, :;\lc::\faster, Crombie, Jnidson, Petrif\ Stevens, Batters by, Plunkett, O'Connell, ·rhornas, Burns, Bell, Cameron, Leahy, lV"atson, Smith, Duffy, l\fa.cfarlane, Dalrymple, Grimes, Philli_ps, Smyth, Lord, Tozer, Kingsbury, and Foxton.

Being in division, Mr. HOOLAN moYed that the votes of all

members interested in this question be dis­allowed-mentioning Sir Thomas Mcllwraith, the Hon. J. R. Dickson, J. Watson, and J. McMaster, shareholders of the Queensland National Bank.

The CHAIRMAN said, as the hon. member for Bnrke had called attention to an alleged violation of the 152nd Standing Order, he might remind him that the question was submitted to the Speaker last night, and he ruled as follows :-

" That the matter was not one of direct personal application, but concerned the general welfare of the community; and that therefore it did not preJudice -the right of any member to vote." With that ruling he entirely agreed.

Question resolved in the negative. Clause, as amended, put and passed.

On clause 4, as follows :-H The agreement shall provide-

(1) As to two million pounds eterling, part of the ~aid sum so due and owing by the bank, that repayment sball be made by twelve equal half­yearly instalments, commencing not later than the first day of July, one thousand eight hundred and ninety-nine ;

(2) .A.s to the balm:we of the said sum so due and owing, repayment shall be made in such sum or sums as the Treasurer shall from time to time demand upon giving six calendar months' notice, but not exceeding in any one period of six consecutive calendar months ~he sum of one hundred thousand pounds;

(3) The said sums of money or so much thereof as from time to time remain unpaid shaH bear interest at the rate of four and a-half per centum per annum, commencing from the date of the agreement and payable half-yearly there­after."

Mr. POWERS said that, as there had been no meeting of the depositoro yet, it would be better to say that the agreement "may" provide, instead of sa-ying it "shall" provide.

On the motion of the COLONIAL TREA­SURER, the word "may" was substituted for "shall."

Mr. REID moved the omission of "twelve," in paragraph 1, with the view of inserting "six." The object of the amendment was to make the £2,000,000 of Government money available earlier than was proposed, and he intended to move a further amendment substi­tuting 1894 for 1899. There was a large loan due in 1895-6, and if the £2,000,000 were allowed to be used by the bank, according to the proposed Rcheme, it would not be available for the purpose of paying that loan. If his amendments were carried the Treasurer would be able to get the money in six equal half-yearly instalments, commencing not later than the 1st, July, 1894. It had often been said that if the Government did anything for other people they would destroy their self-reliance and British independence, and he had no desire to see the British independence of bank directors destroyed. Let them stand on their own feet and find a way out of their diffi­culties, and their independence would come to the front. When people were pampered too much they became indifferent, and the Queens­land National Bank had been liviug on the State long enough. The scheme of that Bill was the worst form of socialism the Government had yet proposed, as in lending that £2,000,000 to the bank the State took all the risk, and the bank got all the benefit. Had it been frn,med on proper socialistic lines, so that the State should receive the benefit as well as take the risk, probably no one in the colony would object to the Queensland National or any other bank getting that money. No doubt that bank had been a great benefit to the colony; but the money which belonged to the people and was deposited there had been a greater benefit to the bank than the bank had been to the country. He therefore trusted that the Government would agree to the amendment, so that they might get the money into their hands as soon as possible and have something behind them to cope with any future difficulties that might arise.

The COLONIAL TREASURER said the hon. member did not seem to consider that the holding of the money by the bank did not in any way increase the indebtedness of the colony. There were certain debentures falling due in 1895-there were none falling due in 1896-amounting to £750,000, and those would have to be provided for. But it must be remembered that those very debentures were now carrying 6 per cent., and that there would be no difficulty at any time on the part of the Treasurer in converting those into deben­tures carrying a much lower rate of interest. There was no necessity to provide for that out of the money in the bank. It was merely a conversion loan, and instead of increasing the indebtedness of the colony it would, to a very large extent, decrease the annual charge on the colony for interest. If they wanted

122 Queensland National Bank [ASSEMBLY.] Agreement Bill.

the money to spend, there would be some­thing in the contention; if not, why should the bank be forced to pay it? His chief objec­tion to the amendment was that if they accepted it, and laid down a hard-and-fast rule that the bank should find a certain amount of money in a certain time, it was quite possible that the recon­struction of the bank might not take place at all. The object of the Bill was to assist the directors in putting the institution on a sound basis ; and, as he had frequently assured the Committee, what the Government proposed to do was to be done in the interests of the country, not in the interests of the bank. It was not in the interests of the country at the present moment to insert hampering conditions which might possibly, and very likely would, nullify the whole object of the Bill. The element of time was important, as that was the only thing the bank required; and if they forced the bank to realise the money lent upon selections, farms, sugar plantations, business houses, and pastoral properties, the result would be most disastrous in the interests of the colony. It was to avoid that that they proposed to place the Treasurer in a position to make the best terms he could in the interests of the whole colony. If the bank could pay within the time provided in the clause, and carry on the business of the country as they had done before, so much the better, but the hon. member would see that it was not wise to tie them down, as he proposed, without any discretionary power at all.

Mr. POWERS said that if the hon. member's amendment was carried with the clause in its pre;;ent form, without the suggested alteration from 1899 to 1894, it would mean that the money should be paid not in thre~ years, but in nine years.

The COLONIAL TREASURER : This does not compel us to wait for the utmost limit of the time.

Mr. POWERS: No, by the alteration already made they were not hound hard and fast. He hoped the creditors when they met would see that the money might be paid earlier than was provided for. With regard to the £750,000, it was true that was a 6 per cent. loan, and there would be no difficulty in getting the money ; but as the money was due by the bank they thought it was better to get it from the bank, if they could do so without causing a crisis, than to go to the expeme of floating a loan.

Question-That the words proposed to be omitted stand part of the clause-put ; and the Committee divided :-

An:s, 30. Sir T. Mcllwraith, 3-fessrs. Barlow, Byrnes, Nelson,

Tozer, Philp, Foxton, Midson, Petrie, ·watson, Mcl\Iaster, Orombie, Armstrong, Kings bury, Agnew, Burns, Cribb, Cameron, Phillips, O'Oonnell, Plunkett, Stevens, Leahy, Grimes, Thomas, Duffy, Smith, Dickson, Thorn, and Chataway.

NoEs, 17. :Messrs. Powers, Groom, Daniels, Fisher, Rawlings,

Dunsford, Browne, Dawson, King, Reid, Turley, Kerr, McDonald, Hardacre, Hoolan, Cross, and Jackson.

Resolved in the affirmative. Mr. PO\VERS said that in order to meet those

hon. members who, while not in favour of six large payments instead of twelve small ones, considered the time for repayment too long, and as the question had been fully debated already, he would move the omission of the word "nine," with the view of inserting "four." That would make the term seven years, as the first instal­ment would fall due on the 1st of July, 1894.

Mr. DUFFY said that, while no one regretted more than he did the position of the Queensland National Bank, he felt called upon to vote for the amendment, as twelve years was too long a

period. He would not expect the bank to repay its indebtedness to th~ Government at once, but seven years was a reasonable time. That would mean that about .£300,000 per annum would be repaid, which would assist the Government to meet its engagements. It was unfair to expect the taxpayers to bear what was the result of the bad management of the directors of the bank. He was obliged to look at it in that way, because the greater portion of the money had been borrowed for specific public works, and the directors should have invested accordingly, and made due pro­vision for the probable requirements of the Government. He also held that before any agree­ment was entered into an investigation should be made. He accepted in good faith the assurance of the Colonial Treasurer and the Secretary for Lands ; but theirs was only an opinion of the book values of the securities. Those hon. gentle­men could not pronounce upon the values of the securities held all over the colony. It was a well-known fact that it was said outside that, if an investigation of the securities were to be made, the result would be the immediate liquida­tion of the bank. He offered no opinion himself, as he was not in a position to do so, and he wished to say nothing detrimental to the interests of a very laudable institution. At the same time, as such. a belief prevailed outside, it wa8 the duty of Parliament to endeavour to ascertain the true position of affairs ; and if, as the Colonial Treasurer and Secretary for Lands had told them, th& bank was in a sound position, and its securities were good, it would have nothing to fear from such an investi­gation. On the contrary, it would have every­thing to gain by it, because if the investigation was favourable it would clear away the rumours that had been put in circulation. He recognised the Queensland National Bank as a thoroughly national institution ; it had been instrumental in giving encouragement to many local industries in their hour of need, and therefore it was deserving of every consideration. At the same time, he held that they should make the best terms possible for the speedy repayment of the amount due to the country, because such repayment would enable the Government to prosecute many public works urgently needed. Many hon. members were scarcely aware of the tremendous liability of the Queensland National Bank to the Govern­ment after its reconstruction. It would owe the Government a much larger amount than that mentioned in the Bill. The clause stated that .£2,000,000 was to be repaid in instalments extending over twelve years, and the Treasurer mentioned a further sum of .£350,000 to be repaid on whatever terms the Government might propose. Those were not the whole of the Government funds in the hands of the bank. In looking over the Savings Bank returns he noticed the sum of .£500,000 was lodged on the 31st December last as a fixed depo8it, and he would like to know whether that formed part of the £2,000,000 which it was proposed to pay back in twelve instalments? He did not wish to make things look too bad for the bank, and would assume that the £500,000 was included in the £2,000,000. In the event of the House giving its sanction to the Bill in its present form, how were the Savings Bank withdrawals to be met if the depositors made a rush and re­quired their money? Another liability that no speaker had touched upon was this : They had quite recently authorised the issue of Treasury notes, and about .£300,000 worth had been advanced to the Queensland National Bank in exchange for their suspended notes. If the bank was reconstructed it would find it impos­sible to issue its own notes, because of the very heavy stamp duty now imposed, And

Queensland National Banlc [23 JUNE.) Agreement Bill. 123

say the bank was called upon or found it necessary to issue Treasury notes for its currency, it could then, under the Treasury Notes Act, borrow from the Government at 4 per cent. without security, except their note of hand. They would not be expected to hand over the necessary deposit of gold in exchange for the notes. He was thoroughly in sympathy with the bank, and hoped that the passage of the Bill would result in much good both to the bank and to the country. Another matter be wished to refer to was in connection with another very laud· able institution. The Secretary for Lands, in speak· ing yesterday, referred to the fact that banks in former years had J:een obliged to reconstruct, and particularly mentioned the Bank of New South 'Wales as one which had been twice reconstructed. From that statement it was implied that the Bank of New South Wales reconstructed on the same basis as the banks which were now going through their trying ordeal. That was not so. The reconstruction of the Bank of New South Wales simply meant an alteration of its charter, and not shutting down upon its depositors' money.

The PREMIER: There was certainly no insinuation made by the Secretary for Lands against the Bank of New South Wales.

Mr. DUFFY: That statement was correct ; there was no insinuation further than that tbe inference was that the Bank of New South Wales reconstructed on the same basis as other banks now undergoing reconstruction. That bank had done good service in former years, and was doing good service now to many people who had been stranded by the suspension of other banks.

The COLONIAL TREASURER was very much surprised, after looking at the division that took place last night, to hear the extraordinary speech just made by the hon. member. It sur­prised him exceedingly, because he had always given the hon. member for Bundaberg the credit for very considerable intelligence; but he had got up to make a second reading speech on a clause which he had not adhered to in any way. The hon. member said in effect that the Bill was bad, yet last night he supported it, and now he said the Government were not to be trusted. If any better means could be devised for finding out whether the bank was sound or not, they should have been stated before, because it was on the assumption that the statements of the Government, after investigation, were accepted, that the Bill was gon@ on with. It was a pity that the hon. member had reflected upon the Savings Bank. It appeared as if certain hon. members would like to raise a panic, and make depositors rush that institution. He had evidently not read the Savings Bank Act, and did not know how the money was invested. The most charitable construction that could be placed upon the remarks of hon. members who made such statements was that they did not know what they were talking about. The hon. member for Bundaberg was also wrong in regard to the Treasury notes. Neither the Queensland National nor any other bank could get a single note, if he chose to say so, without paying a sovereign for it. He could demand gold in exchange from all the banks that required those notes, and they all required them, both the going and the suspended banks-they were quite pleased with the scheme. Nor was it likely that the Government would try to deceive the House as to the indebtedness of the bank to the Government, yet the hon. member had insinuated that they had kept back .£500,000 and said. nothing about it. He had stated the total in­debtedness of the bank. Some hon. members did not wish to allow the Government any discretion ;J.t all, but to make it imperative that they aho.uld

compel the bank to disgorge in seven years, whatever might be the state of affairs in the colony. There was nothing in the Bill to fix any particular number of years; but some limit must be stated, and perhaps a much shorter period might be agreed upon, It was not fair to hamper them by making a hard-and-fast time within which the bank must find the money. Surely everybody knew that the money was not in the bank, but was invested in all kinds of enterprises and institutions throughout the colony; and if it suited the bank, no doubt the bank would do its best to get rid of its liability to the Government instead of continuing to pay the somewhat exorbitant rate of 4Ja per cent. interest. He was simply asking that some little confidence might be reposed in the Government, and that they might be trusted to make the best terms they could in the .,interests of the colony.

Mr. McDONALD did not understand the hon. member for Bundaberg to reflect in any way upon the Colonial Treasurer or the Secretary for Lands in connection with the opinion expressed by them as to the soundnee.~ of the bank, but simply to echo what was to be heard in different parts of the colony. It was freely stated that the bank in question was in a very shaky con­dition ; and it was rumoured that many pro­minent men were intimately connected with the overdrafts of that institution. He did not pro· fef<s to know whether that was true or not; but he thought it would be wise for both the Govern· ment and the directors to court inquiry into the affairs of the bank.

Mr. DA WSON said one advantage in adopting the amendment now before the Committee would be that the Treasurer would be in a position to get the first instalment of the money next year, and he would then have a little money to expend on works that were urgently needed.

The HoN. J. R. DICKSON said that if it were possible it would be very gratifying to have the money due to the Government paid forth· with; but if the proposed amendment were adopted it would probably lead to the other creditors of the bank making a similar demand, to which it would be impossible to yield. Look· ing fairly at the assets and liabilities of this bank, and assuming that the assets were capable of realisation under normal conditions, he thought that any board of directors who would propose to meet all the liauilities within seven years would be very bold men indeed. Did hon. members wish to assist the bank and enable it to revive and become a useful factor in the community, or was it to be forced into liquidation? If the bank accepted the condition that they must discharge their liability to the Government in seven years, that would carry with it a similar proposal from the creditors in England, and such an arrangement would be impracticable. The consequence would be that the bank would be forced to seek relief in liquidation, a thing which was to be deplored, as the experience of liquida· tion in Australia had been most disastrous. Any institution foroed into liquidation at the present time would not have the slightest chance of realising its assets satisfactorily. He could not, for the reawns he had given, support the amendment.

Mr. FISHER thought the Treasurer should not have been so harsh on the hon. member for Bundaberg, who had shown a certain amount of courage in expressing his honest convic· tions. It did not follow that if the amend­ment was carried the whole of the money would be paid to the Government within seven years. Should it continue to be the Government bank there would always be a considerabli!

124 Queensland National Banlc [ASSEMBLY.] Ag1·eement Bill.

amount lying there to the credit of the colony if the present occupants of the Treasury benches were in office, so that the bank would not be rlepleted of public money. The Treasurer stated that the terms set forth in the Bill were the best the bank would make.

The COLONIAL TREASURER: I never said a word about what terms the bank would make ; I said that was the ultimate limit. We may make better terms than are in the Bill.

Mr. FISHER thought if the terms specified were the worst they could make, they might strike the happy medium and reduce t1re time of payment from twelve to seven years. No one desired to force that institution or any other into liquidation ; but there were great fears that if the clause were carried as it stood, they might have a repetition, at the next election, of that use of political influence by the bank which had been referred to on the second reading of the Bill.

The HoN. G. THORN pointed out that the Queensland National Bank reconstruction scheme was far more liberal than that of any other bank, except one small one, which had suspended payment. The London Char­tered Bank fixed the time of payment at twenty years, oand the Australian Joint Stock Bank at thirteen years, and the creditors in some banks had to take preference shares as well.

Mr. POWEHS said that although the Trea­surer stated last night that he invited discussion on the Bill and would accept any reasonable amendment, yet the very first hon. member on the Government side who entered upon the dis­cussion, and did not agree with the Government, had got such a bullying from the Treasurer as would keep the rest of them, holding similar opinions, as quiet as lambs. And what was it all about? The hon. member for Bundaberg simply wanted to know whether the Savings Bank money was safe. That could have been easily answered by the Treasurer assuring the hon. member that it was safe, and that he need not be alarmed about it. With regard to an investigation into the accounts of the bank by the Treasurer and the Secretary for Lands, all the hon. member asked was how they could tell the value of securities in the outside country districts.

Mr. DUFEY denied the charge made against him by the Treasurer that he was endeavour­ing to throw discredit on the Government Savings Bank. Such a thing was far from his intention. He had simply asked how the Savings Bank withdrawals were to be met, and the hon. gentleman might have given him the information without administering such an ear­wigging for having asked the question. He had not said one disrespectful word with reference to the action of the Government on the financial busi­ness before the Committee; and he would only add that the amendment of the hon. member for Charters Towers, which he voted against last night, was very different from the one of the hon. member for Maryborough, in favour of which he had just spoken.

Question- That the words proposed to be omitted stand part of the clause-put; and the Committee divided :-

AYEs, 33. Sir T. :M:cllwraith, ~'Iessrs. Byrnes, Nelson, Tozer,

Philp, ~1idson, Stephens, Petrie, 1Vatson, i\.fc:Master, Chataway, Dalrymple, Crombie, Armstrong, Agnew, Phillips, Burns, Foxton, Cameron, Plunkett, Stevens, Leahy, Cribb, :i\1aclarlane, Thomas, Bell, Tooth, Smith, Smyth, Grimes, Dickson, Thorn, and Lord.

XoEs, 19. :!iiessrs. Powers, Groom, D:u1iels, Rawlings, Jackson'

O'Connell, Cross, Duffy, Fisher, Dawson, King, Tnrley' Reid, :i\icDonald, Hardacre, Hoolan, Kerr, Dunsford' andBrowne.

Resolved in the affirmative,

Mr. TURLEY moved the omission of the word " six," with a view of inserting " three " in the provision for six months' notice of a demand by the Treasnrer upon the bank. It had been admitted that there was very little money available, and it was advisable to have sums of money at the disposal of the Treasurer to meet, in some way, the difficulty of numbers of people who were to-day in want of the neces­saries of life.

The COLONIAL TREASURER said that the same objection applied to that amendment as to those previously proposed. The hon. member must not run away with the i'dea that the Treasurer would be bound down to the Bill. That was the outside limit. It could not be more than six months.

Amendment put and negatived. Mr. STEVENS asked the Colonial Treasurer

if his investigation had been deep enough to enable h\m to say whether the bank would be able to pay 4~ per cent. in addition to the ordinary charge of 1 per cent. for expenses

The COLONIAL TREASURER : That de­pendtd entirely upon the progress of the colony, but he had no hesitation in saying that he believed they would be able to pay 4~ per cent. The only difference it would make would be that the shareholders would get so much less.

Mr. POWERS asked whether the scheme of rearrangement pnblishecl by the Queensland National Bank had been approved of by the Colonial Treasurer, or whether any provision would be made by which the preferential claim of the Government would be preserved? In the published scheme the bank reserved to itself the right to pay off, before it fell due, any portion of the money it owed upon giving one month's notice. Would the hon. gentleman see that one class of creditors would not be paid off, leaving the Government, with their preferential claim, out?

The COLONIAL THEASURER said that he had not given any approval to the scheme; but the Bill would give him authority to do so. The idea of the Bill was tu induce the large depositors in England and elsewhere to accept some scheme of reconstruction ; but, while the Government did not insist upon their rights, they would insist upon getting the same terms as the other depositors-no better, and certainly no worse.

Mr. POWERS said that as the hon. gentle­man was the one who would most likely have to make the arrangements with the bank, after his statement, he (l\lr. Powers) would not propose the amendment he had. intended to move.

Clause, as amended, put and passed. On clause 5-" Information to be supplied "­Mr. DUNSFORD moved the omission of the

word "may," with the view of inserting the words "with the ad vice an cl assistance of the Auditor-General for the colony of Queensland shall "-demand any information he required. That would do something towards safeguarding the interests of the Government as against the bank. The previous clauses gave the Queensland National Bank power to retain the .£2,000,000, and it would be twelve years before they regained possession of it, if they ever did regain it. Twelve years must pass over before the colony was placed in possession of the £2,000,000, and six years before it got any of it. It was imperative that the colony should safeguard itself, and he proposed the amendment with that view.

The COLONIAL TREASURER said no good reason had been given for the amendment. The Auditor-General was not an officer of the Go­vernment, but of Parliament, and at any time

Queensland National Bank [23 JUNE,] Agreement Bill.

Parliament could give him directions. The hon. member might be fully assured that whenever the Treasury wanted competent a'sistance to enter upon an investigation it would have it at .command.

Mr. DUNSFORD said if duties were given to the Treasurer by law, they could be given to the Auditor-General. In the past they were aware that the Auditor-General had acted as 1> check upon various Governments, and the amendment would, at all events, be a safeguard.

The COLONIAL TREASURER said the Auditor-General was an officer with peculiar functions. The House could, by resolution or otherwise, give directions to him what to do. His proper function was to check the Treasury, and not act with it.

Amendment, by leave, withdrawn ; and clause agreed to.

Clause 7 put and passed. Mr. POWERS moved the following new

clause-The agreement shall also provide that the Govern­

ment may at any time appoint some person) not being a member of Parliament, as a director of the bank, who shall by virtue of such appointment continue to a~t as if he had been appointed under the articles of associa­tion of the bank until such appointment is cancelled by the Government. The agreement had to extend over twelve years, and inspection would constitute no control at all. The new clause would allow the Government to have some control over the conduct of the affairs of the bank. If the Treasurer were not satisfied with the inspection, this was the only step he could take. J<'rom the time the first payment was made in two years no other payment would be made for four years, and during that two years, as long as the interest waB paid, there could be no inter­ference. He did not know what arguments could be advanced against his proposal, and hoped there would be no objection.

The COLONIAL TREASURER said the clause was entirely permissive, and he failed to. see what use a director would be. He would find himself in a very anomalous posithn without any voice in the cond net of the bank, and would be simply acting as a spy. If they attempted to do anything beyond what was already provided, they would run a very large risk of making the bankacompletefailure. The relationship between a bank and a private citizen was of a very delicate nature, and if a Government official were put in to act as a private detective no one would like to deal with the bank. The Bill already gave the Treasurer full power to demand most minute information as to the affairs of the bank, and if he found anything- wrong he would at once refer the matter to the Crown Law Officers. If the Government appointed a director they would have to pay him, and he would require a large salary.

Mr. LJ<JAHY said he had supported the bank so far, and was in favour of appointing a director. He did not care whether the bank were reconstructed or able to carry on without it ; it would have to retain the confidence of the public, and the appointment of an independent director in the present case would tend to increase that con­fidence, and such a director would be placed in no more anomalous position than any other director. It did not follow that because he would leave in three years that he would divulge the business of the bank. Other directors did not do so. The very fact of his being appointed would be prima facie evidence of his being of the highest character, and in the interests of all parties such a director should be appointed. The Treasurer took an extreme view of the matter when he said that the official representing the Government would be there as a spy. He

would be there in the interest of the country, and he could be there in no higher interest. 'The very fact of his being there would be a check upon the other directors, and it would be to the ad vantage of the institution as well as that of the Government to make the appointment.

The ATTORNEY-GENERAL thought the arguments used by the hon. member who had just sat down did not in any way support the proposition before the Committee. What would be the result of passing the proposed new clause? ·what would be the voice of one director among six or seven? If the object was to get an insight into the affairs of the bank, it was already provided that the Treasurer could get that information by going to the bank himself. But there was another point to which he would call the attention of the hon. member for Maryborongh. At present the Government could get full insight without any responsibility; but if they put a director on the board then Parliament would become concerned in the management of the bank, and if anything went wrong the cry would be that it was the fault of the Government, and the Government would have to make it good. In some of the schemes of reconstruction there was a clause providing that the creditors might elect a certain number of directors; and if the creditors of the Queens­land National Bank made that provision part of their scheme, then the Government, as creditors, would have power to vote in the election of persons to represent the creditors on the board.

Mr. POWERS said that in either case it was only as a creditor that the Government would appoint a director. His duties would be at an end as soon as the bank ceased to be indebted to the Government.

The SECRETARY J<'OR LANDS said that if a bank was to live it must live on public con­fidence ; and if it had a perpetual bailiff on the premises nobody would do business with it, because he would be regarded as the instrument of the Government. He knew of many valuable accounts being kept in banks that had no local directors simply because clients could make their arrange­ments with the manager and have no fear of their business being known by competitors in business or rivals in politics. He was sure the proposed scheme would not answer. The pro­poBed director would be neither use nor ornament unless he had the power to veto, and if he had that power the result would be that if anything went wrong the shareholders and depositors would expect the Government to make it good.

The HoN. J. R. DICKSON said that if the Government accepted the amendment, it would give countenance to the feeling that the directors of the bank should consist of class representa­tives. He thought that the directors should be men representing all concerned; and he depre· cated the idea of having persons on the board of directors tp specially represent the creditors.

Mr. HOOLAN said why the amendment should provide that the representative of the Government should be "some per,;on not being a member of Parliament" he did not know; it waB certainly not paying a very high compli­ment to members of Parliament. The "person" might be a chimney-sweep or a shoeblack, but not a member of Parliame'1t. How­ever, the amendment was necessary. Direc­tors of banks and other institutions were elected by shareholders scattered all over the world, and there was as much tout­ing and electioneering, and as gnat dodges resorted to, for the purpose of gaining a seat on a directorate as there was to get a seat in Parliament. Banks were also reconstructed by proxies, and there should, by all means, be a

126 Queensland National Bank [ASSEMBLY.] Ag'l"eement Bill.

strong system of espionage or surveillance over people who touted for seats on those directorates. The Treasurer could not, in addition to the onerous duties he had now to perform, take upon himself the tremendous burden of look­ing after the general management of the Queens­land National Bank so as to keep it straight. He {Mr. Hoolan) would therefore support the amendment, and he might candidly say that he accepted almost everything pronosed by the hon. member for Maryborough, as tbat hon. member was always prepared to criticiee all measures brought forward, and had not proposed anything which would be detrimental to the interests of the public. It would have been a good thing if many of hi8 amendments had been inserted in the Bill.

Mr. FOXTON said it would have been more satisfactory if the hon. memberfor Maryborough, in proposing his amendment, had quoted an instance where a similar scheme had been adopted and worked with success. In dealing with such an important question the legislature should proceed slowly, and not take a step in the dark which might afterwards lead to trouble. Nothing could be more undesirable than to place a "man in possession" of the bank in the way proposed. It would cast a slur on the institu­tion, and the man would have no more power than would be given to the Treasurer by the Bill. Even if he had a vote on the directorate he would have no power, as the majority would carry the day, and he would probably be in opposition on almost every question. He would be a sort of private detective-the servant of the Government-and would simply have to report to his master, the Colonial Treasurer, on every­thing that took place in the bank which he thought might be of interest to the Government. That was very undesirable. It was no doubt desir­able that they should have some sort of inspec­tion, but further than that they should not go. He would also point out that the agreement between the Queensland National Bank and the Government had, he presumed, come to an end with the suspension of the bank. Supposing that in the future the Government, following the Victorian example, were to deal not with one bank alone, but with the associated banks, would the hon. member say that in every one of those banks holding Government money there should be a director appointed by the Government?

Mr. POWERS said there would be no neceseity to do so as long as the banks paid their way. The new clause did not make the appointment compulsory ; it simply enabled the appointment to be made in the event of its being deemed desirable to do so.

The SECRETARY FOR LANDS asked if the hon. member really knew what the duties of a bank director were? The Government director could not possibly look minutely into everything that was going on. \Vhat would be the result of such an appointment? It would be at once said, " The Treasurer is not satisfied with his inspec­tion, and he has put a Government director in." The result would be most disastrous.

Mr. BROWNE thought the new clause would act as a safeguard to the bank. There would certainly be no danger in appointing an independent, outside man to take part in the operations of the bank on behalf of the principal creditor, and to see that the interests of the State did not suffer.

Mr. LEAHY said that though ridicule was thrown upon the amendment by hon. members on the Government side he knew that many of them approved of the proposal. Some of the directors and the chairman of the bank also approved of provision being made for new directors.

An HoNOl"RABLE MEMBER : Appointed by the Government?

Mr. LEAHY: No; and he had told the hon. member for Maryborough that he did not approve of the amendment in its present form. Such a power as the clause would give would be of no use at the present time;" but the present Government would not always be in office, and some other Government might find it necessary to have such a power, and be able to exercise it. He held that, though power was given to inspect the operations of the bank, if the inspector found anything in the conduct of its affairs which he could not approve of, there was no power under the Bill to enable the Government to interfere. If the bank went on regularly for five years and met all its obligations, and at the end of that time closed again, what would the Government do?

The ATTORNEY-GENERAL: Our priority would come in.

Mr. LEAHY: That might be so, bnt a man went insolvent in Victoria last year and only paid ~d. in the £1. He did not suggest that that was the position of the bank, as he believed it was as good an institution as any in the colonies ; but in dealing with a matter of that kind they should know what the.powers of th'e Government really were.

The COLONIAL TREASURER said that if everything was going on smoothly and the bank met its engagements, there would be no reason to interfere. If the outside depositors made it a condition for their allowing their money to remain with the bank that they should have a voice in the appointment of a director, the Government agreement with the bank would reserve the same right for the Government.

Mr. LEAHY said he had not yet got the information he wanted. The 6th clause was necessary or unnecessary. If it was unnecessary it should not be in the Bill; and if it was necessary, and the inspection under it disclosed the fact that something wrong was going on, the Govern­ment should have the power to step in and inter­fere to prevent it ; but under the Bill they could do nothing but grin and bear it.

Mr. PO\VERS said the Colonial Treasurer really proved the necessity for the new clause in saying that if the outside creditors of the bank insisted on the right to appoint a director, the Government would reserve for themselves the same right. The hon. gentleman really placed less value upon the opinion of hon. members of the Committee than upon the opinion of the outside creditors of the bank.

The COLONIAL TREASURER said the Bill was an enabling Bill, and the hon. rr.ember wanted to introduce a clause to give powers which the Government already possessed. The hon. member admitted that the power could only be used in a case of grave emergency, and in such a case the bank would be immediately closed.

Mr. STEVENS said the question asked by the hon. member for Bulloo had not been met as clearly as it might have been. Of course the Government could insert various conditions in their agreement with the bank, but they were laying down hard-and-fast rules in the Bill, and the Government should have some power to interfere if the affairs of the bank were not being conducted as they ought to be in the public interests. Up to the sixth year only the small sums would have to be met; but the assets might be melted away in the meantime, and if the Government had not the right to step in, the large payments could not be met.

Queensland National Bank, q-c., Bill. [23 JtrNE.] Public Depositors' Relief Bill. 127

The COLONIAL TREASURER was aston­ished the hon. member could not see for himseif that if such a thing occurred it would be a breach of the agreement, because it would be giving some of the other creditors a preferential claim. It was not to be supposed that the Government were going to make an agreement whereby they would allow themselves to lose their money for the sake of foreign depositors. If that were happening they would soon find it out, and take immediate action.

Mr. DALRYMPLE said that hon. members were there as trustc>es for the money of the colony, and, therefore, had a great responsibility resting upon them. If they took all the pre­cautions which had been taken by capable men who had been placed in precisely the same position in reference to the re­constructed banks, such as the Australian Joint Stock Bank. and the Commercial Bank, and if they retained their preferential claim they would be doing all that was necessary. As to the proposed director representing the Govern­ment, the creditors of other banks, representing a much larger sum of money in the aggregate than was owing to the Treasury, had not considered it necessary to take such a step, and the Attorney­General had shown that it was not necessary. lf they had such a director he would have no power to close the bank at any moment, and there was really no use for him. It was in the public interests that the reconstruction of the bank should take place, and in making those provisions they must be careful not to make them the means of preventing reconstruc­tion. He was not endeavouring to protect the interests of the bank in the least. He was endeavouring to protect the interests of the colony ; because, by enabling the bank to carry on, he believed both the creditors and the share­holders would be paid, and business would be furthered. They should not insist upon provi­sions that men capable of judging had not thought it necessary to take, and as the Govern­ment only represented 25 per cent. of the bank's liabilities, the remaining 75 per cent. of the creditors might not agree to what they provided. He hoped they would; but, in order toinducethem to do so, they must do nothing to deter them.

Mr. POWERS said that no other creditors in any of the reconstruction schemes had occupied exactly the same position as the Government. The hon. member for Mackay said that he was acting in the interests of the whole colony, and he (Mr. Powers) thougl<t that every hon. member had acted in the same interests. He had no cause to complain of his treatment by the Queensland National Bank, except in regard to the active part it had taken in the general election.

The ATTORNEY-GENERAL: Who d1agged the name of the bank into politics first ?

Mr. POWERS : I certainly did not. The ATTORNEY-GENERAL: Your absent

leader in his manifesto was the first. Mr. POWERS said that throughout the elec­

tion he had most carefully avoided speaking against the bank. He had not, by the part he had taken during that debate, wished to do the bank any harm; he hoped hon. members would give him that credit. He believed the expression of opinion by hon. members would a&sist rather than retard the scheme of reconstruction, and it would satisfy hon. members tbat the Treasurer was determined to secure the colony.

Mr. LEAHY asked the Colonial Treasurer whether, in the event of the outside depositors insisting upon having a director to represent them, the Government would be hostile to their demang ? Would they vote against it?

The COLONIAL TREASURER said there was no intention of voting at all.

Mr. FISHER said the hon. member for Mary­borough had been told that the clause was the worst he had proposed, and it was rather unfor­tunate that all amendments coming from their side were considered obstructive. He (Mr. Fish8r) had only heard one argument-that of the Attorney-General against the clause. The Secretary for Lands, with all his banking ex­perience, told them that a Government director would simply be a detective, and that a cry might be raised that the man was put in charge ; but the same argument might just as well be used if the Treasurer caused an investigation to be made. A great number of accusations of hostility on the part of hon. members against the Queensland National Bank had been made, but he did not think there was ally hostile feeling. He believed the Government had practically been consulted in that matter, because they heard that a certain sum of money had been put to the credit of the colony immediately the bank suspended. He should support the amendment.

Question put; and the Committee divided:­

AYEs, 19. Messrs. Fisher, McDonald, Hoolan, Kerr, Hardacre,

King, Browne, Reid, Powers, Stevens, Leahy, Dunsford, Jackson, Groom, Cross, Rawlings, Turley, Daniels, and Dawson.

XOES, 33. Sir T. ~J:cllwraith, 11essrs. Xelson, Byrnes, l'hilp,

Dickson, Tozer, · Barlow, Battersby, Thomas, Thorn, Chataway, ::\fcMaster, Burns, Tooth, Foxton, Phillips, Cribb, Bell, Cameron, Duff.v, ~Iacfarlane, Grimes, Smyth, Smith) Armstrong, Dalrymple, A.gnew, Crombie, Lord, Stepbens, Midson, Petrie, and Watson.

Resolved in the negative. Clause 8, and preamble, put and passed. The House resumed ; and the Bill was reported

with amendments. Amendments read a first and second time, and

agreed to. The third reading of the Bill was made an

order for 'Tuesday next.

PUBLIC DEPOSITORS' RELIEF BILL. SECOXD READING.

The COLONIAL TREASURER: In moving the second reading of this Bill, I do not think it necessary to deal with the subject at any great length, because I understand that it meets with the approval of members generally. It proposes to release a large number of accounts belonging to public and semi-public in8titutions, and the money required to effect that is to come out of the Treasury, It must be evident that to throw on the Treasury the disbursement of the wholfl of that money in one year would be highly impolitic, particularly at the present time, and it is therefore proposed that the pay­ment shall be spread over a considerable number of years, so that the Treasury may be recouped in the manner proposed. I move that the Bill be now read a second time.

Mr. HOOLAN: I think the Government are to be commended for having introduced this measure, and when it gets into committee some of my triends intend to move an important amendment, with a view to including the unionist prisoners defence fund, which is a purely charitable fund, in the Bill. I hope the Go­vernment will accept that amendment, because I think it is nothing but right that they should do so.

Mr. FOX TON : I wish to say one word as to the framing of this Bill. It proposes that under certain conditions the Governor in Council may make certain advances to the depositors specified

128 Public Depositod Retief Bill. [ASSEMBLY.] Loss qf H.M.S. " Victoria."

in the Bill. The word "advance" is used; and it is provided, amongst other things, that after the Treasurer ha" made such advance the depositor's account and securities are to be transferred by the bank to the Treasurer. I have no doubt as to what the intention is, but there is no prodsion in the Bill that I can see which shows that this is to be regarded distinctly as a loan, and not as a taking over of the account. There is nothing to show that the depositor is to be in the position of a borrower from the Government ; and it would b~ much more satisfactory if it were more clearly defined that the Government will merely hold the security, and that in the event of one of these banks paying ultimately, say, 15s. in the £1, the local authority or charitable body will be liable for the remaining 5s.

Mr. POWERS : Who will be liable in con­nection with the flood relief fund?

Mr. l!'OXTON: The persons who obtain the money. If they choose to come to the Govern­ment for relief they should be in the position of borrowers, and not ask the country to take the risk which accrues from the fact of their holding accounts in suspended banks.

Mr. FISHER : I think it would facilitate matters if the Treasurer would state whether the Government are likely to accept an amendment including friendly societies in the list of public or semi-public bodies.

The ATTORNEY-GENERAL: With refer­ence to the question raised by the hon. member for Carnarvon, I would point out that these advances will not be loans, but an absolute taking over of the accounts. We look on these funds in the banks, if not exactly as public funds, at o,ny rate as quasi public funds, and therefore the advances are not to be loans. Against whom would the Government go in case the bank hold­ing the flood relief fund failed to meet its engagements, or in cases where advances were made to liquidators or trustees? The object is to get the money into their hands, so that the estates may be wound-up and the pro'ceeds dis­tributed. I mention this so that there may be no misconception about the measure.

:Mr. STEVENS : I would like to know whether the omission of agricultural societies from the list of public bodies was intentional or accidental, or whether the Government have any objection to insert them in the Bill when we go into committee ?

The ATTORNEY-GENERAL: Have any of them credits?

Mr. HARD ACRE: I have no objection to the Bill, but I think that, for the information of hon. members, the Treasurer should give some idea as to the total amount involved in the proposed advances. I believe the police super­annuation fund is a trust account. It is included in the Auditor-General's report among the public funds, and I certainly think we ought to have the information I have referred to.

The COLONIAL TREASURER: You can nsk me that question when we go into committee ; I cannot speak again now.

The HoN. J. R. DICKSON : I think the Bill meets with general approval, but at the same time I mnst say that, unless the classifica­tion of the accounts is strictly defined, the Treasurer will be incessantly importuned to define what may be considered to be accounts of a public nature ; and I would suggest whether it would not be better by Tuesday to have a clause prepared defining what are public accounts. Then, again, supposing any of those bodies have in addition to their current

accounts fixed deposits not yet matured, will they receive any immediate relief with respect to those fixed deposits before the date of maturity arrives?

The COLONIAL TREASURER: Not neces­sarily.

Mr. DA WSON: The Attorney-General has pointed out that the advances by this Bill will be an absolute taking over of the account, which practically means that they will be loans to the banks holding the accounts, and I would draw the attention of hon. members to the fact that no provision is made in the Bill for charging the banks any interest on those loans.

Question put and passed ; and the committal of the Bill made an Order of the Day for Tuesday next. -

ADJOURNMENT. The House adjourned at twenty-two minutes

to 11 o'clock.