STATE NOTE ISSUE.

Dominion, Volume 2, Issue 471, 1 April 1909, Page 7

STATE NOTE ISSUE.

6 NEW PROTECTION. ;o PROPOSALS OF A LABOUR MINISTRY. : MR. FISHER'S PROGRAMME, (nv telegram—press association— copyright.) Brisbano, March 31. In his policy speech at Gympie, the Federal Prime Minister, Mr. Fisher, foreshadowed tho amendment of the Constitution, so as to permit of tho adoption of the newprotection (which tho High Court declared unconstitutional). Ho also foreshadowed a Commonwealth note issue, and tho minting of silver coinage, which together would produco a revenue amounting to £190,000 per annum. Tho Federal Government, ho said, would , not go on tho money market on any condition whatever until a settlement had been arrived at with tho States oii the State debts question. Ho considered tho appointment of a High Commissioner a necessity. , OBJECTIONS TO, A FEDERAL NOTE ISSUE. SILVER COINAGE PROFITS As to the Federal note issue and silver coinage, it is not clear whether the estimated revenue of <£190,000 per annum is net or gross. It may bo pointed out, however, that previous estimates made under the last Government indicated a net annual profit of. .£191,000 on .£200,000 of silvor coinage. Tho right of silver coinage was given to the Federal Government a 9 the result of the 1907 Imperial Conference. The proposed Federal note issue was also a project of the Deakin Government. At that time tho "Argus" write:—"There is no doubt that the proposition by the Commonwealth Government for the establishment of a Federal Treasury note issue to replace the note issue of the individual chartered banks, will meet with strong opposition from all finangial authorities. The principle of the Government issue of bank notes is, in the opinion of many financial authorities, a very risky and dangerous proceeding, judged from the interests of the general public, and a bad financial policy for_ any Government to take up. It is also claimed to be unnecessary, because the people of Australia are perfectly satisfied with the present system of note issue by the banks, and the conditions under which it is worked commanded tho public confidence. Tho note issue is a first charge on all assets of tho banks, it is therefore, absolutely secure, but in addition to that each bank has eight sovereigns in its coin reserves for overy pound, note in circula--1 tion. With such an overwhelming security, the question- is asked why should tho Government come forward with any suggestion of a federal note issue, which would, it was feared, bo tho forerunner of a forced loan such as was proposed by Mr. Watson, on behalf of tho Labour party. "The idea that the banks, who kept between them many millions sterling of coin in hand, should be forced to hand a large proportion of that coin over to tlio Government, and take in its place non-interest-bearing notes, is strongly condemned. The claim of,, the supporters of the scheme, that these notes would be as good as cpin in an emergency, is declared to be unsound. The operation of the transaction would be that the Government, having secured this forced loan * without interest would spend,the money, less the small proportion kept as a reserve, and tho banks would be left to hold the notes, which the public woilld not take, because they did not require them. There would be no more possibility of loading tho public with these notes beyond tho limited requirements than of filling a sponfe im w il ter W on(1 its capacity. The note°s, unlike the gold,•would not be accopted outside . Australia. Remittances to meet Government indebtedness must be in gold, and the ultimate result would be that, while the notes remained, the country 'would gradually but surely be depleted of its gold reserves. In a tune of crisis these notes might be made a legal tender, in Australia, but that would, it has been claimed, be only a partial relief, and would not allay the greater danger that would exist in a time of stress under the conditions if altered as suggested. A paper issue is liable to serious depreciation... 'Tho security of all banking depends upon the basis of gold coin, and tho adoption of tho proposal contained in the Governnient measure takes away that security,' is one view that lias been taken of tho situation." The Deakin Governments proposal also aroused the opposition of the, Victorian Government, which pointed out that the issue would mean a loss in'revenue to the States, as at present tho banks wero paying something like 3 per cent, per annum on the average circulation. It was possible (said '• the then ActingPremier of Victoria, Mr. Davies) that the Federal Government had power to issuo the paper currency, but it would bo a severe cut into a Stato revenue. He thought the existin" system cost the banks about all that the issue was worth to them, for they had to bear the cost of preparing, registering, and cancelling the notes, and they ran the risk of forgeries, and also had to pay on the averago circulation to tho State. THE NEW PROTECTION. It was on the New Protection issue that , the Labour party withdrew its support from the Deakin Government, causing the fall of the ' latter and the advent to power, of the present Labour _ Government. The Labour party was j not satisfied with the form of constitutional , amendment proposed by the Deakin Govern- ' ment; so it will, now be interesting to see what I sort of amendment Mr. Fisher will propose. The history of. the New Protection movement is as follows:— i On October 1, 1907, Sir William Lyne (Federal Customs Minister) outlined legislative proposals intended to secure that the interests of the worker and the consumer should be safeguarded, whilst giving the manufacturer the benefit of a protective tariff. It was proposed to levy on all manufactured goods, an excise duty at the rate of half the import duty on imported goods of the same class, and to exempt all goods manufactured under "fair , and reasonable" conditions as to remuneration of labour. The standard of "fair and reason- ( able" would be that which enabled a manufacturer to have the Commonwealth trade mark applied to his goods. A special Board of Excise would be created to inquire, and to declare f if the conditions of remuneration in any pro- , tected industry were fair and reasonable, and ' then to apply the trade mark. The board would < have large powers of entry and inspection of t factories and books, wages-sheets, etc. The board would further have power, if it should j c find prices unduly high, or combinations to n raise prices in protected trades, to recommend j [ to Parliament to lower, or abolish the import duty. These proposals were adopted in tho Federal ! Excise Tariff Act; but in June,. 190S, the Fed- ! eral High Court decided that the Act was in- ' valid, since it infringed State prerogatives. On October 2 Mr. Deakin laid on the table a memorandum regarding a proposed amendment i to the Constitution to legalise the "new Protection." The amendment empowered Parliament to legislate concerning the employment ( and remuneration of labour in any protected industry, and granted to the Inter-State Commission, already authorised by the Constitution, the power of. determining which indus- t tries shall bo protected, and administering, r executively and judicially, the legislation on this subject.-'Holding that these proposals did 0 not go far enough, the Labour party decided to t withdraw their support from the Government (November 6), which was defeated on a formal vote of confidence by 49 votes to 13..Mr. Deakin resigned, and Mr. Fisher then formed a Labour Cabinet oil November 12. THE PAYMENTS TO THE STATES. In the first portion of his speech, reported yesterday, Jlr. Fisher is represented as offering, in substitution of the Braddon clause, to give a fixed premium of X'i,OOO,COO per annum to the States, the latter to also receive any sur- ' plus Customs revenue oil a per- capita basis, j: What the recent conference cf State Premiers proposed was that tiie C'mtimomvenllh should ' return annually to the States three-fifths of o tho Customs revenue (instead of throe-fourths under the Braddon clause), provided that the amount returned t" the States in any jnc year be not less than jL'u,7. r ;0,000.