Page 3270 - Week 11 - Thursday, 13 September 1990
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Now, what that means is that, under section 51, the States as well as the Commonwealth are empowered to create the credit of a nation.
Let me explain practically what I am talking about here. It is like going out to the Canberra Airport and saying, "I would like to fly to Sydney", and the person behind the desk says, "I am sorry, you cannot go". You say, "They are all full?". And they say, "No, half empty, but we have run out of tickets". That is the equivalent of saying we do not have the money. Let me give you an example that will indeed bring it close to home. Sir Denison Miller was the director of the Commonwealth Bank. He was the first governor of the bank which unfortunately had its charter destroyed in 1924 - unfortunately for Australians, unfortunately for Canberrans who are concerned about school closures and the Royal Canberra Hospital, and unfortunately for other people losing their business and so on. He stated:
The whole of the resources of Australia are at the back of this bank, and so strong is the Commonwealth Bank, whatever the Australian people can intelligently conceive in their minds and will loyally support, that can be done.
He also said:
The Commonwealth Bank financed the Commonwealth of Australia during the First World War to the tune of $700m without having to tax the people for the return of the money or interest upon it ... and I could have financed the country for a further like sum had the war continued. That kind of money is also available for productive purposes in times of peace.
Indeed, and in times of peace, the same credit creation was used to fund the national shipping line and the national rail line. Abraham Lincoln stated that the privilege of creating and issuing money is not only the supreme prerogative of the government, it is the government's greatest creative opportunity. Let us have a look at what the bankers themselves say about the idea of whether or not they create money, as I put it, out of thin air - newly created wealth. This is from the July 1983 issue of Branch Banking, an English bankers journal:
There is no more unprofitable subject under the sun than to argue any banking or credit points, since there are enough substantial quotations in existence to prove to the initiated that banks do create credit without restraint.
Perhaps that was well backed up a few weeks ago in Melbourne by the head of the Bank of Melbourne who said, "Banks have unlimited liquidity". That was an interesting statement.
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