AND NOW TO AUSTRALIA AND ITS DEBTS AND BONDAGE

Taken from the original “Story of the Commonwealth Bank” by F.J. Amos, 9th edition:
Read the full story by F.J. Amos here….
https://alor.org/Library/Amos%20DJ%20-%20Commonwealth%20Bank.pdf
 
Mr. Amos writes:

     “The Story of the Commonwealth Bank” was originally delivered as a lecture before the  Sturt Electoral Committee, Adelaide, and was first printed in pamphlet form in 1931.  It exhibited the usual defect of all lectures, namely, condensation of the subject matter to an extreme degree.  The great and unexpected demand which arose for the pamphlet found me so closely occupied in other work that the second and third editions had to be printed practically unaltered, and I began to be more and more sensible of the need for amplifications and additions.

     These were accordingly made in the fourth (revised) edition, after which only minor additions, for the sake of clearness, were inserted in subsequent editions until the eighth was called for.  It was then found necessary to continue the story up to Australia’s entry into the second world war (1939), and also to include in it a short account of the note issue.  In the present (ninth) edition it has been deemed advisable to mention very briefly important paragraphs in the Report of the Royal Commission on the Australian Monetary and Banking System (appointed in 1935), as this most important report is now either out of print or has been withdrawn from circulation.
D. J. AMOS, F.A.I.S.
ADELAIDE, July, 1940.

The Story of the Commonwealth Bank
     Let us consider the story of the Commonwealth Bank. It merits your attention, for if the Commonwealth Bank had been allowed to function as it did at the commencement of its career, Australia would have been helped over the years of depression as it was helped over the war period (1914-1918), many prosperous business firms would have been saved from ruin, and somewhere about one-third of our people would not have had to eat the bitter bread of charity…

THE NOTE ISSUE.
     In 1910, the Australian Notes Act called in all notes issued by the private banks and by the Queensland Government. To all practical intents and purposes, it confined the power of issuing bank notes to the Commonwealth Government. But money is also created by banks making advances of credit to people, then entering these “advances” upon the opposite side of the ledger as “deposits,” and telling their “depositors” to draw against these credits by means of cheques provided by the
 banks.  The money thus brought into existence is destroyed whenever a bank chooses to call in its “advances,” and by so doing to lessen its “deposits”.

     Money is likewise created every time a bank purchases securities (whether Government stock or shares in private companies), and it is also destroyed every time a bank sells them.
 The reader must constantly bear in mind that these means of increasing or decreasing the currency at will were left in the hands of the private banks.


     “The reason,” says Mr. Butchart in his now world-famous lecture, “why the Government legislated regarding the bank note, is that they thought they understood it, and the reason why the Government did not legislate regarding the bank deposit (credit) is because they had no clear understanding about it at all”.

     
Small wonder that this was so in 1910, as we are only beginning to realise now (1940) that all money is simply set to pay either good  demand.
  Whether that promise to pay is stamped on a coin, printed on a note, or simply written on the page of a bank’s ledger, does not alter the fact that the vital thing is the promise to pay, and not the mere material upon which it is written.


     Between the years 1914 and 1920 the Commonwealth Government increased the note issue from, in round figures, £9 ½ million to £59 ½ million, but all these notes did not go into permanent circulation.
  Sooner or later they fell into the hands of the associated banks, who imprisoned in their vaults all of the notes that were not absolutely necessary for the nation’s “small change.”

     
Upon this imprisoned national currency, they based an enormous increase in bank credits—a currency which comes into existence as a debt due to the banks—for the use of which they charged a heavy rate of interest.

     
By 1920 the banks held nearly £32 million in Australian notes, ... 
 

     
In 1912 Australia set up the government owned Commonwealth Bank with a capital of only $2 million.  Starting with this tiny equity base, the bank loaned the government $700 million to fight the war--and stood ready to create as much more had it been needed.  When the war ended, the bank went on to finance the completion of the trans-Australia railroad.


     Unfortunately the death of the first head of the Commonwealth Bank, Sir Denison Miller, in 1923 led to it becoming a clone of the private banks, and it is now regarded as more of an enemy than a friend by many Australians.


     The more recently formed Reserve Bank of Australia served a creative role in financing the Second World War under the leadership of its first governor, H. C. Coombs ... Sadly, the Reserve Bank has since undergone the same corruption of purpose as has the Bank of Canada-–becoming one of Australia’s major problems instead of a source of solutions”.

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