PUBLIC BUSINESS. - Currency (Amendment) Bill, 1930—Second Stage.


According to our new Standing Orders, the correct course is for the Minister to open the debate on the Second Stage.

As Senators will see, the Bill is a very simple one. One of the principal objects of the Bill is to give the Currency Commission a wider choice of securities. At present, it is confined to British securities maturing within a period of twelve months. When the original Bill was passed there was a comparatively wide range of such securities available. Conditions have altered since then and the range of choice is very limited indeed—so limited that it is believed the earnings of the Currency Commission would be unduly restricted if this Bill were not introduced. The Banking Commission did not recommend that any such restriction as appears in the Currency Act should be imposed on the Currency Commission, nor was any such restriction included in the original Bill. In the course of the passage of the Bill through the Oireachtas, an amendment was inserted restricting the Commission to securities maturing within a period of twelve months.

There is a proposal in the Bill also to enable the Currency Commission, if it thinks fit, to invest in securities of the U.S.A. The United States of America is, in fact, the only country outside Great Britain in which we think it would be wise at the present time, or within any time foreseeable, to give the Currency Commission power to invest. Conditions being as they are, I do not think this power is likely to be availed of by the Currency Commission. From the point of view of returns on investments, it would not be a wise act to purchase securities of the Government of the United States. Having regard to the great wealth of America, its undeveloped resources and the position it holds in the financial world, there is no doubt that the securities of the Government of the U.S.A. are as safe as any that could be found. There is a consequential provision in Section 4 which is of less consequence. Section 5 deals also with a minor matter—the defacement of notes. That can be dealt with in Committee. The principle of the Bill is directed to giving the Currency Commission a wider choice of securities so that it may, without endangering the funds of which it has charge, make larger earnings. There is no compulsion of any sort on the Currency Commission. The Currency Commission is so constituted that it may be trusted to take a very conservative and careful course. It is a body which might be described as semi-independent. It consists of three members appointed by the banks, three members nominated by the Minister for Finance and a Chairman chosen by those members. The members hold office for fixed periods. No Minister, even if he were disposed to do so, could suddenly change the character of the Commission even as regards the nominees of the Minister for Finance. As regards the other nominees, no Minister could change the character of the Commission at all.

I should like to have further explanation as to why this proposal is made. It is a definite and absolute departure from the recommendation of the Banking Commission. I am not able to say whether the Banking Commission was wise or not in what they advocated but they were very positive in their recommendation that "such legal tender notes as may be issued shall be equal in amount to British Government obligations held for their protection." Paragraph after paragraph refers to these legal tender notes being based upon British Government securities. I do not express any view for or against the change, but the change being so definite and positive, it seems to require a little more justification than has been given. Are we to take it that the members, or any number of the members, of this Commission agree that circumstances have changed to such an extent that there should be a departure, or is it the view of the Government that this Commission was not infallible in its judgment? The amount of justification the Minister has given is not sufficient to warrant this change in the law.

If Senator Johnson wants me to say that I anticipate the immediate downfall of Great Britain, I am not going to say it.

I think it might be stated that the Commission require these extended powers and that the subject will be dealt with in amendments on the Committee Stage.

Question put and agreed to.
Bill read a Second Time.
Third Stage fixed for Wednesday next.