Section 8 of the Bill sets out that the Minister for Finance will supply £24,000 of the capital of the bank. At least that is the money advance he is making. The capital, as set out in the same section, is £40,000. This is a departure from the recommendation that was made by the majority of the members on the Banking Commission. We have got no very good reason from the Minister as to why a departure should take place from the recommendation that was made or, in fact, why it is now proposed to alter the capital arrangement which was made when the Currency Commission was established. The point as to who subscribes the capital in this case is not a very strong one. Speaking from recollection, the capital of the Currency Commission was approximately £40,000. They were allowed to make a profit of 5 per cent. on that. They have been in business for some 15 years and there is a very large sum in reserve. Paying off the banks now—although I think no one would claim that the banks are entitled to any share of whatever reserves there are in the Currency Commission—and taking possession of the reserves and merely putting £24,000 or £40,000 into this, is a change from settled practice which has no recommendation of any sort or kind behind it. A different system was recommended by two Banking Commissions. It may be that the Minister thinks that 5 per cent. gives too much of a profit. That is not a big point, assuming that it is so, but there is no limitation, as far as one can see in this Bill, as to what profit the Minister will get. In any event, it is immaterial because he proposes to get whatever profits will be derived from this new system which will be a more expensive system than the former one, a system which seeks to get, for every £ that is issued in currency notes, sterling banking. To get sterling backing means that the banks have got to put up either cash or securities of equal value, so that, so far as this system is concerned, it will be more expensive for the banking institutions of the country.
Whatever strength there was in the Currency Commission, or whatever strength there is going to be in this new Central Bank, was or will be derived from the existing banks. Whatever integrity there is in the currency that is at present in issue in this State or in circulation depends exclusively upon the banks. These are questions of fact and do not admit of argument or contradiction. The safeguarding of the integrity of the currency of this country depends more upon the joint stock banks of this country than upon the central bank which one may compare to a policeman on point duty.
It will simply regulate the channels, having nothing to do with the sources, or the origin of the sources. I would like to hear from the Minister what reason there is for the change. There must be a guiding motive of some sort or other to suggest a change of this kind. It is not, as I have said, a matter of very great consequence except to this extent, that it would appear as if it were thought that the banks were not worthy now of participating in the shareholding of what will constitute the capital of the central bank. Now every penny that can be got out of the services of the banks is being got by the State. For years there has been a reduction not only in bank profits but in bank dividends, and, what is worse still, in the reserves put by by the banks from year to year. In other countries the main concern of the people has been to conserve the strength of their banking institutions. They are regarded as the anchor, one might almost say the foundation, of industry and commerce throughout those states. Here it is quite a common and popular thing to point the finger of scorn at the banks as if they were the concern only of rich people. They are nothing of the sort. That also is a question of fact and not one for argument. The House is entitled to be told by the Minister why this change is being made.