as chairman, brought up a special report of the select committee on the subject of the Motor Carrier Transportation Bill, requesting leave to bring up an amended Bill.

Leave granted accordingly.

In connection with the Select Committee on Asiatics in the Transvaal, I would like to call your attention, Mr. Speaker, to what constituted a breach of the privileges of the House, viz., that the contents of the report of a select committee have been published before the report has been laid on the table. I refer, more particularly, to a telegram which appeared in the “Rand Daily Mail” of the 10th of May—

Clause 239 of the Standing Rules and Orders reads as follows—

The Minister should table a motion for the appointment of a select committee to investigate the matter.

I move—

seconded.

I have been following this statement read by the Minister which occurred in the paper; and there is no publication. The rule requires that there shall be some material publication. All that there is here is a rumour. The “Rand Daily Mail” contains some rumour which may be right in some detail, or may not; but it is simply a rumour. I have repeatedly seen these rumours about the working of select committees of this honourable House; only this morning I saw a grievous attack on me because I was “taking a certain line” on the native bills in the select committee, that I was “holding up the work there,” and generally going in for these diabolical ends—with which I am usually charged—a whole rigmarole was set out, and there was a furious attack on me. I have not seen fit to ask for a select committee to follow up these “disclosures.” I am sure this House will be going too far, and we will be putting up a steam hammer to crack a fly—if it were to go to the expense of appointing a select committee to follow up a rumour, possibly a silly rumour, in one of the papers. I submit, if we do so, we are really making ourselves a little ridiculous. If there were a real disclosure, if the draft report had been published, or some material disclosure had been made of that kind, it would have been different; but it is simply a rumour. I must ask the Minister not to pursue that course. Under the circumstances, I do not think we are doing justice to ourselves or enhancing our dignity in the country by doing this sort of thing and instituting a formal inquistion by way of a select committee when a mere rumour has appeared in the press. I know nothing about the case myself, and know only what the Minister has read here; to my mind, this sort of thing always happens, and no one has reason to dissent, unless there is publication of the draft report, or something of that kind. A mere rumour like this is not worth our attention. I hope the Minister will not look upon this as a condign punishment of the paper. It is the business of newspapers to hunt up rumours. It is a hard business, which deserves our sympathy. For us to lose our tempers on that account and ask for this extreme procedure—the extreme penalty of the House, so to say, is not, I think, the right course to pursue.

The hon. member for Standerton (Gen. Smuts) now makes it appear as if a serious mistake has been made, and he is already speaking of a severe punishment which will be inflicted. Let me tell him that as regards the attack made on him, he, and all of us, know that whatever the position is, what is stated in the report is certainly not true; what is stated there, however, is, moreover, not represented as anything that has been dealt with in the select committee. However ridiculous it may be, it certainly does not come under the rule referring to the publication of the proceedings of a select committee. With regard to this, I wish to say that I consider it a serious offence when any of the proceedings of a select committee—in connection with which under their very rules adopted by the House, it is regarded as a fundamental principle that nothing that is done there shall be made public before it is laid on the table of the House— are made public. It is not so much a matter of the newspaper, but I must say that I consider it a very serious offence for anything to be published which has come from anyone who was present in the select committee—whether from a member who was present there and a looker on, or from a member of the select committee itself. If we, as a select committee, cannot feel assured with regard to our work there being kept secret until such time as the House says that it is to be published, then the select committees will be tremendously handicapped in their work. Take, e.g., the select committee with regard to native legislation. Should we ever be able to discuss that important matter with that candour if we suspected that what we said, and possibly provisionally settled, would be published to-morrow or the day after to the public? It may so compromise a select committee, and a member or members of the select committee, that it would constitute the most serious damage to them, and I think, for that reason, we ought strictly to maintain the rule. At present it is not a question of punishment, but let us, at any rate, show that we will not commit such things. If anyone is to be punished, then I think it will, at least, show that he is an unreliable person. I hope that it is not one of the members of the select committee, but other members of the House are permitted to attend such a select committee, and they must know that if what takes place there is going to be published it will greatly injure the select committee. Suppose that such a thing occurred. We cannot forget that we have officials of the House on those select committees, to whom everything is confided that takes place there, and who are pledged to secrecy. When anything is published, what is the result? Is not the first thing that it is possibly said by the public that the officials may just as well, as members of the committee have been guilty of it? I think that we are called upon for the protection of the officials to see that such an offence does not take place. That is the only way to prevent them. I wish, in conclusion, to add that it is not a question of punishment at the moment, but that it is necessary for the sake of the officials, and the members of the select committee, that a proper enquiry should be made as to where the fault lies, so that at any rate an innocent person shall not be under a cloud in connection with the matter.

I am sorry that the Prime Minister has not seen fit to adopt the suggestion made by the right hon. the member for Standerton (Gen. Smuts). After all, what appeared in the paragraph referred to? I saw it, too. For all I know, it may have appeared in other papers, but what does the report say? All it says is, “It is rumoured”, and from whom that rumour came would have to be the object of the enquiry. I take it in the case of a breach of privilege having occurred, the object is, if action is taken, to uphold the dignity of the House. Let us look at the rule, and examine it carefully. Rule 239—

Who are to be subpoenaed as witnesses? There is no evidence that there has been a breach of privilege. Before the adoption of a motion of this kind, there ought to be some evidence before the House, and there is no evidence whatever. The right hon. the member for Standerton has pointed out how ridiculous we should make ourselves if we passed the motion. I hope that on reconsideration the Minister will see fit to withdraw the motion.

I would like to assure the House that the information does not come from these benches, so that I can speak freely on the matters as one of the innocent parties. The hon. the Minister and the Prime Minister are taking themselves much too seriously. We are towards the end of the session, and we are being kept here every night with a view to expediting business, and now, all of a sudden, because there has been a statement in a newspaper respecting the work of a select committee, we are asked to appoint a select committee to go into a question of privilege. I quite agree with the right hon. the member for Standerton that if that is to be done, the scope of the select committee should be widened to enquire into all statements that have appeared in the press, from time to time, dealing with anticipation of events which have been taking place on select committees. For instance, there was the case referred to by the right hon. member of a most circumstantial statement with regard to what has taken place in a select committee of this House. That, of course, is being left alone. After all, I would suggest to the Minister that what appeared in the Rand Daily Mail simply carries out a definition of the late Lord Curzon that “a capable journalist is capable of giving an intelligent anticipation of events.” The only effect of the action that the Minister proposes to take will be to enhance the reputation of that journalist and I feel sure that is not the desire of the Minister. I think the Minister should try to treat the matter reasonably and withdraw this resolution.

I would like to remind the hon. the Minister of the Interior of an incident which happened in the British House of Commons when an English newspaper got a report regarding the Cabinet decision to arrest Mr. Ghandi. The report turned out to be true and a great deal of fuss ensued. An inquistion was instituted as to the source from which this information emanated and it turned out that a Cabinet Minister had given a certain journalist an absent-minded answer to a question put to him and that answer was all that was necessary to put the astute journalist on the track of the news. On that foundation the story was built up and turned out to be perfectly true. In this particular case, nothing that has happened in connection with that report appears to be sufficient justification for the solemn proceedings the Minister has asked us to initiate. I read the rule for the information of the House—

Ever since I have been in the House it has been the custom for members to ask “what are you fellows doing in such and such a select committee?” And that practice has been sanctioned by custom. I know of cases where during the proceedings of a select committee in order that members may be able to arrive at a decision, they have with the full knowledge and consent of the chairman of the committee taken their own party into their confidence and stated the lines they are acting upon and asked “may we do it or not”. Once such consultation takes place, how can you expect that nothing will drift out and how can you ever find out how it happened. Let me tell the hon. the Minister of the Interior that from time to time I have heard from members of both sides of the House something of the feeling in that select committee—how things are going.

You have a right to go and watch the proceedings.

That is true, and in a loose and general way the House is kept informed as to what is going on. I consider the Minister’s intention as to a solemn invocation of a select committee to enquire into this matter is surely going much too far. If some journalist had got hold of any report in advance and published it, it was merely because of a report picked up in the lobby. The Minister’s proposal would mean solemnly interrogating the members of that select committee and the staff of the journal concerned, and suppose the journalist says he is not prepared to state where he got his information from, and that he did not get it from any member of the select committee, how are you going to proceed? We really should not agree to this committee being set up.

It is very difficult for us to oppose a motion like this, but if we pass it we ought also to know that we can convict a person. When anyone falls under the clause of the Standing Rules and Orders, which the Minister has quoted, he must, not as I understand, actually publish a part, or a whole of the evidence, proceedings, or report of a select committee, but I understand the report in the Rand Daily Mail only says that there is a rumour that a certain resolution was passed.

Then any secret information could be published under cover of a ‘rumour”,

If we are to appoint a select committee and the person who wrote it mentions from whom he heard the rumour, would it then be possible, on the ground of that report, to convict such a person under the Standing Rules and Orders? If we cannot convict him, then I cannot see that the dignity of the House is raised, and that there is any object in instituting such an enquiry. I do not believe it will be possible, because one does not become much wiser from what the Rand Daily Mail published, because it is a report which may be true or untrue. It is not a publication of evidence, proceedings, or a report, as provided in the Standing Rules and Orders. I therefore fear that we shall not attain our object at all by the appointment of a select committee.

I too hold that the privileges of the House should be carefully safeguarded, but it seems to me the Minister is straining at a gnat and swallowing a whale. I understand it was the Rand Daily Mail which spoke about some remarks which occurred in the select committee. I want to draw attention to Ons Vaderland. Why is Ons Vaderland not included in this indictment? It made a dastardly attack on the hon. member for Standerton (Gen. Smuts) in the worst possible taste, and it mentioned what happened in select committee. Why should one paper be singled out for a minor offence when a paper which is the Government organ has committed what, to my mind, is the most flagrant outrage on parliamentary decency, which we have seen for many years even from a Nationalist newspaper. If the Minister intends to proceed, I move—

Let me read this article. Ons Vaderland dealing with the Select Committee on Native Affairs says this—

That is not a rumour. It says it is quite clear that the chairman of the select committee will have nothing to report, and there is not a word of condemnation or reproof from the other side of the House about this article which is a much more flagrant breach of privilege.

I cannot allow the hon. member to go on. This is a matter which concerns the joint sitting of both Houses. No select committee of this House can be appointed to go into a question of privilege which affects the joint sitting.

We are dealing with a question of principle, of a breach of parliamentary privilege. Whether it was a select committee of this House or a joint sitting or not, it seems to me that it was a breach of privilege, and in regard to the joint sitting which took place it doubles the fault.

I cannot allow the hon. member to proceed on those lines.

If I am ruled out of order, I say that the hon. Minister should, at any rate, have included this National organ, or this Government organ, in his indictment. Why should complete silence be maintained when a far worse offence is committed by one of their own organs, not that I claim the Rand Daily Mail is one of our organs? Far from it. I fail to understand what definite principles the Rand Daily Mail stands for, but so far as fairness is concerned, I expect fairness from the Government side. I expect some strong reproof against Ons Vaderland. I will continue to read the report. It says, “It is quite clear.” There again I say, even if it is a select committee of the joint sitting it is giving away something which makes the offence much worse. The report says, “It is quite clear that Mr. Jansen will have nothing to report at that late hour, and that the matter will not come before Parliament again before February, 1931.”

Is that Ons Vaderland?

Yes.

Is it written in English?

You clever boy! I am glad to see that the hon. member is afraid of this report. All I can say is that if the hon. member has any doubts about this translation let him say so.

Is it a translation? Whose translation is it?

I do not think we need worry about the hon. member. This is a report and it is a correct translation.

From which paper are you reading?

It is a correct translation from Ons Vaderland. If you gentlemen do not believe it, I am glad to see that the hon. member is apparently ashamed of it. If this is the only way that they can wriggle out of it, by questioning the translation, it shows that there is something wrong with the state of Denmark.

Which paper is it?

I should like to know which of the Nationalist members supplied the information to the paper. When we have this enquiry we should direct our attention to these channels, for it would be of great importance to this House. Obviously, there has been a serious leakage of confidential information, and that leakage emanates from a Nationalist. I do not think that anybody else but a Nationalist would give such confidential information to a newspaper. I will read the article again—

I must repeat, the hon. member cannot go into that matter.

I do not question your ruling, sir, except that I would point out that article 58, of the Standing Rules and Orders, says that in a case of this sort the rules of the House of Assembly shall apply so far as practicable. With all due deference it seems to me that this is a relative matter.

I’m afraid it is entirely irrelevant.

I should like to ask your ruling, sir, as to whether it is competent for me to amend the motion before the House to include in its ambit any other case?

I have just told the hon. member that I cannot allow it.

I do not propose moving that this specific case of Ons Vaderland be included unless the hon. Minister is well enough advised to withdraw this motion. If he persists in the motion I shall move that the select committee shall have power to deal with any other case of a similar nature.

The Cape Times in regard to the Riotous Assemblies Bill, for instance.

I am astonished at the fear shown by hon. members on the other side, and I think I have put my finger on the spot. We look upon this as a very serious symptom of the lowering of the standards of this House that there has been a leakage of confidential information by members on the Government side. Where has this leakage come from I Some Nationalist member of Parliament on the other side of the House has walked to a prominent Nationalist journal, and has given away certain prominent Government secrets. That is the obvious inference, and it is a permissible and an irresistible deduction to make. I am now talking of the Rand Daily Mail.

To a point of order, has the hon. member the right to make a reflection on hon. members on this side who are members of the select committee of the joint sitting?

I have already explained that this House cannot pass resolutions in connection with the select committee of the joint sitting. If the hon. member wants to propose a motion with regard to another matter of alleged breach of the privileges of the House, then he must quote what was published, and hand in a copy of the newspaper. The case that the hon. member has mentioned here, however, cannot be dealt with by this House, because it concerns the joint sitting.

Will you be good enough to tell us in English what you have said?

I was pointing out to the hon. member that if he wishes to bring up a motion to include other cases of leakage and breach of privilege, he can only do so by bringing up a specific charge, and he must also produce the newspaper in which the alleged breach has taken place.

What you say makes it all the more necessary for the Minister to withdraw the motion and to ask for a joint select committee of both Houses.

That sounds very much like trifling.

The Minister is speaking of this matter far too lightly. Where does the trifling come in? If a trifling breach of privilege has been committed, we are asked to bring in all the majesty of Parliament to enquire into what is a trifling matter. I suggest in all seriousness that the other and far more important breach of privilege should be brought into the ambit of this enquiry. The Minister says I am trifling, but he is trifling himself. Hon. Ministers are thoroughly ashamed of the whole business, and of the action of the Minister in putting his head into this hornet’s nest. I trust he will be wise enough to withdraw this motion, otherwise other linen may be washed in the select committee. If the Minister is going on with his motion I formally move—

I cannot accept that motion. If the hon. member has a charge to make, he must proceed in the manner indicated by me

I hope the proceedings have gone far enough to satisfy the Minister that the best thing to do is to withdraw the motion. If this were a matter where some documents had been disclosed or a draft report had been stolen or published or some definite proceedings of a select committee had been published, we should all be in favour of investigating it to the end. But in this case we are concerned with one of those journalistic “scoops” or anticipations collected probably from gossip in the lobby, and no select committee is going to get anywhere in enquiring into it. I think that what has happened to-day will be a warning to the press and those who collect news for it, that they must not rashly publish what purports to be proceedings or extracts from proceedings of select committees. I think the discussion has served its purpose, and it will be a warning to those concerned to exercise a certain amount of restraint in the future. What was published in “One Yaderland” was far worse than that in the “Band Daily Mail,” for the former was a publication of the proceedings of a select committee, and was published with the probable intent to impart a political atmosphere into a matter which should be outside politics.

How can it be a report if it is a lie?

It reported the attitude adopted in the select committee by Mr. Heaton Nicholls and others in regard to certain proposals. I do not say the report was correct, but it was intended to lead the public to believe that efforts were being made definitely to postpone the work of the select committee. It was no more a summary or a report of the proceedings than is this report a summary. Both purported to be reports, but neither purported to be a publication of any exact document or proceeding, but both are calculated to lead the public to believe that they are reports. It would be very invidious to go into one case and to leave the others on one side. The House will be wise to come to the conclusion that what has been said this afternoon shows the seriousness of what has transpired, and will be sufficient to impress on newspapers the seriousness of publishing reports of that nature. In the interests of the House itself, and having regard to the hopelessness of our coming to any satisfactory conclusion by the appointment of a select committee, the best thing to do is to leave the debate where it is and to take no further notice of it.

While I entirely agree with Mr. Speaker’s ruling, it is very regrettable that the hon. member was precluded from reading the reference in “Ons Vaderland,” because that would have enabled the country to realize how differently the Government view one offence from another, which, to my mind, seems to be infinitely greater. It would have been evidence of the bona fides, or rather of the lack of them, of the Government in bringing this matter before the House. I agree with hon. members on this side, that a greater crime has been committed in the reference in “Ons Vaderland” to the right hon. member for Standerton (Gen. Smuts), for, in addition to the publication of facts in regard to the proceedings of the joint committee, there is a vilification by insinuation of the right hon. member and of other members of the joint committee exposing to the gaze of the world their actions without any possibility or refutation by the gentlemen concerned. If the House takes cognizance of anything at all, it should take cognizance of that. But I do not entirely agree with hon. members on this side of the House in belittling the circumstances to which the Minister of the Interior has referred. Do hon. members realize that there has been a rumour, and you must be very careful how you dismiss a rumour? When a rumour gets abroad in regard to proceedings in the House or in select committees, surely it is a matter which warrants the closest and most meticulous consideration. Surely at this period of the session when we have been realizing our responsibilities to such effect that we sit until midnight and 2 o’clock in the morning discussing proposed legislation and other matters, surely now is the time to utilize all the machinery of Parliament to enquire into a rumour. Let us get to work on this rumour and see if we cannot track the rumour in its lair. It is a wild beast with gaping jaws this rumour, and it must be tracked to its lair, and, if possible, killed. I do not think the Minister of the Interior has gone far enough; all he has done is to move that a select committee be set up to enquire into this rumour. No, something more is required. We have passed legislation on much milder matters than a rumour; we have passed the Riotous Assemblies (Amendment) Bill, which is now an Act, I understand, and has received vice-regal assent, I think.

That is also a rumour.

If we pass legislation like that, giving the Minister of Justice such powers, in things much minor than rumours, surely we ought to do more than set up a select committee. I am going to move something more, that this House instructs the Minister of Justice under the Riotous Assemblies (Amendment) Act, now in being, to smell out the rumour, throw the bones, and having, by the use of his olfactory nerves discovered the rumour, call out the defence force, communicate with the Minister of Defence, and either shoot the rumour, or transport it to some distant land. I think the time has arrived when this House should decide “that rumours shall be killed.”

The hon. member for Benoni (Mr. Madeley) can joke about the matter, but it is a question of principle. In the first place, members of a select committee who are honest men are brought under suspicion, and, in the second place, the leader of the Opposition (Gen. Smuts), as has been mentioned, is also dragged into the matter. I want to urge the Minister not to withdraw his motion, whoever may be found guilty. Hon. members go into the select committees and think that they are in a safe place for dealing with the affairs of the country. The hon. member for Benoni says that it is only a rumour, but it has been broadcasted in the newspapers throughout the country, and whether it is called a rumour or not, an enquiry must take place. I feel that the good name of certain hon. members would be injured if this step is not taken. The difficulty is that correspondents of newspapers are allowed to go about amongst the members in the lobbies and in the tearooms. Those correspondents wander about amongst the members when they are possibly engaged in talking with each other about the proceedings of a select committee. The correspondent hears it and then publishes it. The fault lies in the fact that irresponsible persons are permitted to go about amongst hon. members and to listen, and then to publish the information. A stop must be put to that.

I think if there is one thing that I must make quite plain in starting my reply, it is that when I rose to call Mr. Speaker’s attention to what I consider a breach of the privileges of this House, I did not do so as a member of the Government. I clearly said that I did it as chairman of the select committee dealing with the matter, and I must say that during all the period I have been in Parliament it has been one of the most astonishing things to me that such a matter affecting the privileges of the House should be made a party question. The very least one would expect is that the Opposition would co-operate with this side to protect the privileges of the House. Instead of that, however, there is no support from the other side, not even from the members of the select committee, who are on the other side. What I have done here I did not do on behalf of the Government, but as a member of the House, and as a member who was more particularly responsible as chairman of the select committee. I want to add that I, personally, as the member who made the proposal, am, to some extent, indebted to the hon. member for Yeoville (Mr. Duncan), who, at any rate, adopted a different tone with regard to this matter than, e.g., the hon. member for Barberton (Col. D. Reitz). The hon. member for Barberton treated the matter as something to joke about, but the hon. member for Yeoville, at any rate, saw so much importance in it that he said that it was a good thing the matter had been brought up for debate; that it was a good thing for the House to take notice of it, and that a serious warning should go out in that way to journalists in general that they must not continue this kind of thing. I, therefore, think that I am indebted to at least one hon. member on the opposite side who has really considered it a serious matter. The hon. member for Barberton wanted to take a different line, and that is just as astonishing a thing as I mentioned just now, viz., that the House has to appoint a committee which will investigate possible contraventions of the privileges of this House. A breach of privilege is a definite breach which is brought to the notice of the House. It would be an insult to the dignity of the House to appoint commissions who have to look about to see if there had been impossible breaches that had not been brought to the notice of the House. It is, however, clear that we are concerned with a special instance, and, as far as I am concerned, I shall be glad if other instances of the kind, if any, are brought to the notice of the House. That is, however, not the case, and it is, therefore, necessary to keep a definite breach which has been brought to the notice of the House. Three arguments have been used that I want briefly to deal with. In the first place, the hon. member for Bezuidenhout (Mr. Blackwell) said that it surely could not be prevented that it should become known what had taken place in a select committee. He said that members of a select committee even take the liberty of consulting their caucus on an important point, and he asked what would prevent members of Parliament from further making the matter known. No one, however, has ever said, or can say when he reads the rule of the House, that things that take place in the select committee may not become known. The House, therefore, did not consider when it made the rule that the proceedings of the select committees should be kept so secret. There is nothing against a member of a select committee consulting other persons in as wide a circle as he wishes, but the House intends that nothing should be made public property by publication before the House itself is in possession of the facts, before the House has received the report of the select committee. What the hon. member for Bezuidenhout said has actually nothing to do with the matter under discussion. The third argument employed was that the whole matter is not serious, and that we should proceed with the next business, or rather that it was wrong to bring it to the notice of the House. The hon. member for Yeoville (Mr. Duncan) has already said that, in his opinion, the matter is serious enough. But I would like to say this, that, in the first place, the question is whether the House itself regards its rules seriously. If the House does not do so, why then does it make them? If it does not take its rules seriously, then no one else will do so, and if the House wants to retain and maintain its dignity, it is necessary to investigate such cases of the breach of privileges of the House. The select committees are appointed by this House to do the work laid down by the House. That, itself, gives the House the right to be acquainted with the work of the committees, and to be in possession of the information before the public outside is made acquainted with the work and proceedings of the committees. That is clearly the right procedure. Here we have a case where what was done has been published, and Parliament has not got the facts before it. If such things are allowed, it will lead to serious complications. In this case we are concerned with vested interests of a section of the population of the country. To these people it is a matter of great importance, and the publication of the information may, therefore, result in the immediate holding of meetings of protest, and Parliament will then not have the necessary information before it. What light does that place members of Parliament in? This, in addition to what the Prime Minister has said, that when such information is published, members of the select committees will not feel free to talk as they wish. I am sorry, but I cannot comply with the request to withdraw the motion.

May I ask the hon. Minister of Finance when he can give us any information about the loan estimates.

Tomorrow.

Before we assent to that, may I ask when we will get the report of the select committee. Judging by what has transpired, this concerns the country very much. We should have sufficient time to study that report before the second reading is taken

I am informed that the report will be placed on the Table of the House on Monday, and I will set down the second reading for Wednesday.

Second reading on 21st May.

I move—

The Currency and Banking Act establishing the South African reserve bank, and under which it is functioning, was passed in 1920. Ten years’ experience of the working of the Act has shown up clearly two weaknesses therein. The first is the ultra stringent nature of the restrictions placed on the management in respect of the classes of business that the bank can undertake. The second is the inapplicability to this country of the theory underlying the reserve provisions of the Act, namely, that the volume of bills discounted reflects the volume of trade, so that the note circulation may suitably be regulated by the amount of bills discounted. As hon. members know, Prof. Kemmerer and Dr. Vissering, in their report on the resumption of gold payment, emphasized the need for the bank being enabled to operate freely in the open market, to do business with the public, in order to make its rates effective, and to enforce its policy on the commercial banks, and they made certain proposals with this object in view. So far as these proposals involve administrative action, for instance, the campaign to further the wider use of trade acceptances in lieu of open accounts, the issue of short-dated treasury bills, the opening of branches by the bank, and the transfer of the Government’s account to the bank, I say these proposals requiring administrative action have already been given effect to. So far as their proposals involved legislative action, nothing has been done so far, although every careful consideration has been given to the matter from time to time, and several Bills have been drafted. It was felt from the first that their proposals, sound as they were, as far as they went, did not go nearly far enough to achieve their purpose which the commissioners set out, and which it was necessary to achieve. This view is confirmed by the failure of commerce to respond in any adequate way to the Governor’s advocacy of the substitution of bills of exchange for open accounts. The position to-day is, in spite of every effort that has been made to secure the adoption of this, the commercial bill is not an important factor in the finance of this country. The indications are that in the older countries, the bill of exchange is losing ground vise-vis the overdraft. Accordingly, while the Kemmerer and Vissering suggestions are embodied in the Bill before the House, we have gone a good deal further than they proposed in the direction of freeing the bank from restrictions to which they were subjected. That is in regard to the business which it can transact and in the direction of making more of the funds of the bank available for business of a wider scope by modifying the reserve requirements of the Act in regard to the note issues. If hon. members will refer to the Bill, they will see that the two most important clauses are Clauses 2 and 4. Clause 2 repeals Clause 13 of the existing Act, which specifies the classes of business which the bank may engage in, and re-enacts it with considerably extended powers. Experience has shown that under Section 15 of the 1920 Act, the banking powers are practically limited to issuing of notes and the discounting of trade bills of three months currency. The loan powers, so far as they are circumscribed in the Act, are rendered practically nugatory by the condition laid down, that the stocks and debentures against which the banks may make advances are limited to those issued by the Union Government or a local authority in the Union, with not more than six months to run before maturity. Hon. members will note that it is very seldom that stocks or bonds of this description are in existence, so that Clause 13 (4) authorizing such loans is practically useless, and may just as well never have been inserted in the Act. So far as concerns investment powers, these are circumscribed by conditions affecting the security of the currency in which investments may be made. As to the power which is given to the bank to discount trade bills, I have already indicated that genuine trade bills, as distinguished from purely accommodation paper, are not sufficiently plentiful in the Union to justify their being regarded as an important factor in the finance of the country. It is absolutely necessary for the Reserve Bank to go outside the Union in regard to the investment of some of its balances, owing to the scarcity of these trade bills. Now, it is felt that it is absolutely necessary that if the bank is to have that proper effect, it is intended, in controlling credit in the Union, it should be able, when it thinks necessary, to do some of the ordinary banking business in the country. At present, unless the other banks are really discounting bills, it has practically no touch with the trade of the country. It is true that the other banks are certainly at present re-discounting with the Reserve Bank with increasing frequency, and it is true that the more they rely on the Reserve Bank to assist them in financing the trade of the country, the nearer is the Reserve Bank to the control it desires. Hon. members will see that it is not desirable that the Reserve Bank should be altogether dependent on the other banks coming to it for re-discounting bills. It should have the power to affect the rates of money independently of the other banks. It is for the means of doing this, it is in order to obtain this power, that the present Bill is introduced. It may be asked why, under the existing Act, the powers of the bank have been circumscribed in this way, and why the result of these restrictions had not been clearly foreseen when the Act was drafted? The answer, I think, must be looked for in historical considerations. At the time when the Act was passed and the Reserve Bank was founded, the making of central banks by legislation was, except for the Federal Reserve Banks in America, altogether a new business. The old central banks of Europe had been evolved in the course of many years and tradition counted for a great deal in guiding them in their actions. Well, the Legislature, the Parliament of the time, fearing that the lack of tradition in South Africa might cause the bank to yield to the temptation of competing for business with the other banks all along the line and losing its character as a central bank, the creators of the bank deliberately hedged it about with all sorts of restrictions and practically confined its activities to the discounting of trade bills. The genuine bill of exchange is undoubtedly the best and most liquid asset a banker can hold, and if this country was in the habit of conducting its business on a bill basis, and if we had a bill market and a money market independent of the banks no doubt a central bank even though restricted in its business to the discount of bills could fulfil its functions in a not altogether unsatisfactory manner. As it is, these conditions had been prevailing in the Union, and we are therefore left with the necessity of finding a solution of our problem in a manner different from that of Europe, and have to ascertain on what lines a central bank may be formed. The permissive clause No. 13 of the old Act has been repealed, and a new clause substituted, so as to permit the bank to take a more active part in the business of the country. The additional powers accorded and modifications of existing limitations are as follows: Under head 1, the bank is empowered to sell drafts on its branches and correspondents. Under head III, discount, the period of currency of discountable bills is extended from 90 days to 120 days (Kemmerer). The existing limitation upon the volume of agricultural bills of 20 per cent, of the total volume of discounts is removed. Old paragraph (c) which contemplated a class of business which is not undertaken in the Union is deleted, and a new paragraph authorizing the purchase, sale and rediscount of bills of the Union Government or of a Union local authority having not more than 6 months to run is substituted. Under head IV, loans and advances, the limitation upon securities of the Union Government which may be advanced against, viz.: that they should have not more than 6 months to run is removed. In paragraph (d) a new power is given to the bank to make loans and advances against high class dividend paying stock exchange securities. In paragraph (e) facilities are given for making short dated loans to banks (Kemmerer), and in paragraph (f) facilities are given for lending against bills or promissory notes secured by documents of title representing marketable produce. This power will enable the bank to handle the business which will develop from the passing of the legislation dealing with warehouse receipts which is now before the House (Kemmerer). Under head VI, investment, sub-paragraph (b) permitted the investment of a sum equal to the capital and reserve in Union and other Government securities having not more than two years to run. The limitation upon the currency of the investments is removed, and so is the power to invest in the securities of Governments other than the Union Government. It will be evident that the new section confers very much wider powers than the existing section in regard to the business in which the bank may engage. I should have preferred to give the bank an entirely free hand in this respect subject to the restrictions which are imposed in the next Section (14), but it has been felt that in view of the fact that the commercial banks, who are vitally interested, seeing that they are compelled to keep their reserve with the central bank, it is proper, as it is customary in the statutes governing modern central banks to state precisely the classes of business in which the central banks may engage so that the funds entrusted to their care should be invested only in securities of an appropriate character. While most of us will probably agree with the need for extending the central bank’s powers beyond those prescribed in the original law, it will be admitted that, in the absence of a traditional policy, such as governs the conduct of the business of the older central banks, the removal of restrictions upon the manner in which the funds of the bank may be employed would be hazardous. One is bound to admit that there is much weight in this argument; accordingly in place of giving the board of the bank a free hand, the specific permissive powers have been extended in such directions as the management of the Reserve Bank considered to be necessary. Before leaving Section (2) I should like to draw the attention of the House to the final paragraph which is in the nature of a proviso to the effect that it is unlawful for the bank to advance moneys to the Government of the Union in excess of the moneys which the Government may at any time be in a position to borrow under the statutes authorizing Government borrowing. It might be thought that this obligation existed without its being specified, but the banks attach importance to it on the ground that difficulties have been created in other countries through imprudent borrowings by Governments from their central banks which have naturally led to inflation with its attendant disastrous results. In this country, I think that the laws governing borrowing by the Government are satisfactory, and adequate, and the proviso in question will result in the Treasury when applying to the bank for advances of any description having to exhibit its authority for the proposed borrowing. This will keep the management of the bank in close touch at all times with the Government’s borrowing powers, and its operations in the exercise of those powers. The next Clause (3) contains certain amendments of Section 14 of the Act of 1920. While the section with which I have just dealt specifies the classes of business in which the bank may engage, Section 14 specifies what it may not do. These prohibitions are generally found in the statutes of most central banks, and are what experience has shown in the past to be necessary in their case. The present sub-section (e) is not usually found in the constitutions of central banks, and we propose to delete it under the present Bill. A new sub-section (e) is inserted limiting the period, of loans which the bank may grant, to three months’ currency. The existing Act proceeds on another basis and limits the securities on which loans may be made to six months’ currency. This is an almost impracticable restriction. The usual thing is to limit the period of the loan, and that is what we propose doing here. The other amendments to this section are of an unimportant character, and merely seek to interpret questions which may arise under the section as originally drafted. I now come to Clause 4, which amends Section 17 of the principal Act. This clause requires a holding against its notes of at least 40 per cent, of gold, and the remainder in commercial paper or trade bills. It is proposed to delete the obligation respecting the holding of commercial paper and trade bills, and leave the bank free to hold whatever assets it pleases, subject to the law about the gold cover, which remains at 40 per cent., as laid down under the existing Act. This is a very important amendment, both in appearance and reality. On the face of it, it would appear to change one of the very important features of the Act, that the amount of the note issue should to a great extent be regulated by the amount of bills discounted, the idea being as the volume of trade increases or decreases, the note issue would also increase or decrease. This is a plausible theory, and might work in a country which conducted its business entirely or almost entirely on a bill basis. South Africa is not, however, such a country, and I do not think it is on the road to becoming one. Under those circumstances, I think it is better to face the facts. In the past the facts have been that in order to provide itself with sufficient trade bills to support its note issue, the Reserve Bank, not finding sufficient of these bills in South Africa, has been forced to go outside, to the London market, and if that is so it is useless contending that the amount of bills held by the Reserve Bank in the London market is any reliable indication to the volume of business being transacted in the Union. The question is whether it is worth while maintaining this clause, when it obviously cannot achieve the purpose for which it was originally inserted in the Act. Contingencies may arise at any time which may render it extremely desirable that the Reserve Bank should take some share, for the time being, in the ordinary banking of the country, and such a contingency may arise out of the condition of financial affairs which the country is, at present, experiencing.

[Inaudible.]

We are merely deleting the provision of trade bills, and retaining the 40 per cent. As an example of the existing impotence of the bank to do general business, it cannot make advances on Union Government stock unless the stock is due for repayment within six months’ time, but even if the Act were amended so as to enlarge the bank’s scope in this direction it very often could not take advantage of such enlarged power for the reason that it could not hold such security against its note issue. The same thing applies to any accommodation which the Government might want from time to time. Although we admit that a government’s power in regard to obtaining loans from its central bank, should be restricted, it nevertheless seems unfitted that a central bank should be unable to lend to the Government a certain amount in anticipation of revenue, which is expected to accrue during the financial year, without putting aside an equivalent amount of gold in support of its note issue. This is a position which may very easily occur in a time like the present, when the bank could not be able to make the advances to the Government, or indeed to any of the banks or big insurance companies, without having to part with some of its trade bills, and losing thus some of its statutory cover for its note issue, might have to replace it by an equivalent amount of gold. The fact of the matter is that it is a tremendous handicap on a bank of issue to be bound down like this, and I believe I am right in saying there is no other central bank in existence that is tied up to an equal extent—if hon. members will ascertain what the position is with regard to other countries. Then we come to Clause 5. The object of this amendment is to get rid of a difficulty in the Act as it stands at present. Section 30 provides that the banks shall keep balances with the Reserve Bank up to 10 per cent, of their demand liabilities, and 3 per cent of their time liabilities. It only happens once a month, however, that the banks know exactly what their liabilities are, and though usually they maintain sufficient balances with the Reserve Bank to provide a margin for ordinary fluctuations, it sometimes, although very rarely, happens when the fluctuations are abnormally large, that the margin is insufficient to meet the unknown quantity. It would seem more satisfactory, therefore, that the banks should adjust their reserve balances once a month according to the statement of their liabilities shown in their statutory monthly return. It would be more convenient to the commercial banks if they were allowed to do this, and it would not be in any way disadvantageous to the Reserve Bank. With regard to Clause 6, Section 32 of the original Act, which requires notes and coin to be accepted at par, was emergency legislation. At that time the suspension of gold payments was imminent, and the section was intended, in that event, to maintain the inconvertible note and gold certificate at par with the gold each was supposed to represent. Since 11th May, 1925, the Union has been on a gold basis, and Section 32 is obsolete, and is therefore repealed. The purpose of the proposd new Section 32 is obvious. It is to prevent the term “bank” and “banker” being abused by mushroom institutions, springing up without the necessary financial backing, and under these circumstances probably prejudicing the interests of the poorer classes of the community. It is, in my opinion, most important that the word “banking” should not be abused. Since the year of the Usury Act of 1926, several so-called “banks” have been started, which cannot by any stretch of the word be considered real banks, as that word is ordinarily understood. It has been found that some unreliable institutions use the term “bank” or “banker”, and it is now proposed that in future such institutions cannot be set up without Treasury sanction. It is suggested that the only effective means of preventing the use of the word “bank” by undesirable persons and institutions is to vest the power of veto in the Treasury. This is a temporary remedy, legislation of a temporary character, and this is one of the questions that will have to be dealt with probably when we introduce general banking legislation at a later date. I may say that there is no institution which would welcome more strongly than the South African Reserve Bank the establishment of bona fide and sound banking institutions, but it is not in the public interests that we should allow institutions which are unsound, and which may affect the interests of the poorer classes of the community, to annex the word “bank” to their concerns. These are the principal amendments and modifications of the Act. Hon. members will agree that from experience we have had it is necessary that we should do something to enable the bank to fulfil in a better manner the functions for which it was designed. We have given extended powers to the bank, but we are not in any way impairing its character as a central bank. I hope these amendments will be regarded by the House as necessary.

The finance Minister has told us the reasons which have led to the introduction of these amendments of the charter, if I may so call it, of the South African reserve bank, but before we come to discuss the advisability of these proposed amendments, I think most hon. members will recognize that this bank, in the time that has elapsed since it was started, has abundantly justified the policy which induced Parliament at that day to found such an institution. We have heard criticism from time to time. Such criticism inevitably is made, but, considering the times we have gone through, I think the bank has abundantly justified its object as a central bank. I think we are also justified in saying that we shall see with regret the time, when it comes, when the governor of the bank severs his connection with that institution. I think he has done service to this country, and I say it more particularly because I understand that he will not very long continue in that position. He has done great service to South Africa. There are two main points in the Bill which, I think, require consideration. I do not propose to go into all the details which the Finance Minister explained to us. I agree on the whole with what I may call the minor enlargements of the scope of the bank’s business, the investment in Union Government securities whatever the currency may be, and the power to make short-dated advances. I think we may all agree that these minor enlargements are desirable. With regard to the two main points to which I think we can give some consideration, there is, in the first place, the alteration in the nature of the reserve which the bank is required to keep against its notes. The Minister has explained, and I think it is within the knowledge of most hon. members, that when the enactment was made requiring the Government to keep as a reserve against its note issue 40 per cent, in gold and 60 per cent, in commercial bills, it was generally understood that the commercial policy of this country would grow in the direction of the use of bills instead of what has been hitherto common, open accounts. That idea has not been fulfilled, and I take it from the experience of commercial men that usage in South Africa is not tending in that direction. If that is so, that the usage is not in the direction of using commercial bills, then it is a serious handicap to the bank to keep the reserve required. The idea of requiring part of the reserve to be in commercial bills to the extent of 60 per cent, was to make the note issue automatically keep pace with the requirements of the country. It was thought that the note issue on the part of the bank would rise and fall in accordance with the requirements of the country. This brings us back to the old argument as to how far the country should be regulated by gold reserves and how far by other influences. I do not think we are ready in this country for any other kind of reserves, and I think we may be satisfied with the amendment that the reserve should be secured by 40 per cent, of gold. The Bill is designed to enable the bank to come into competition with other banks of the country; to take part—perhaps only a limited part—in the business of the country. I hear an hon. member behind me saying “why not?” I admit that there is ground for the complaint that the commercial banking business of the country is in the hands of concerns controlled from outside this country, which inclines people to think that the reserve bank ought to be brought into the arena as a competitor of the commercial banks. If we want more commercial banks in this country there may be means of getting them, but we also want a reserve bank. If you make a reserve bank enter into competition with ordinary commercial banks, you will want another reserve bank to exercise its proper function. I know the door open is a small one. The Minister has not gone so far as to give the board a free hand to engage in banking businesses of any sort. I am glad he has not done so. If you once bring the reserve bank into the competition arena—set it free to compete with the ordinary banks for profitable business, you lose that control which it needs if it is to fulfil the functions of a reserve bank in connection with the credit of the country. Of course, you have boom periods when banks run after business, but the result in the end is forced deflation. Let the reserve bank exercise a steadying power as it has done hitherto. I am not speaking from the point of view of the commercial banks. The further you go in the direction of making this reserve bank an ordinary commercial bank, the less it is able to carry out its functions as a reserve bank. The Minister said that the ordinary banks are resorting more than ever before to the reserve bank. Does not that show that the reserve bank is exercising the functions it should exercise—by controlling the finance and credit of the country, and having power over the other banks when they come to it.

The difficulty is they do not come.

I take it if the hank is out to do its business on commercial terms, they will come. If they do not, it means they can finance themselves in other ways. I think we have been in too great a hurry to come to the conclusion that the reserve bank should take a greater part in the business of the country. How does the Minister propose it should take a greater part? There are two main powers he proposes to give. In paragraph 4 of Section 2 he proposes to give the bank power to make loans, or advances on current account against the security of stock, debentures or bills of the Union Government gold coin and bullion or the documents relating to the shipment or the storage thereof; such notes and notes and bills of exchange as are referred to in item 3 of this sub-section and such non-speculative dividend or interest-bearing securities having a ready sale on the stock exchange as the board may approve for that purpose from time to time at intervals of not less than six months. That is capable of a very wide extension of the bank’s activities. Under this power the bank could finance stock exchange loans and any security or share—a mining share, for example.

The classes of securities are defined.

Yes, it says “non-speculative”. But I know things change very much from time to time in regard to what shares are speculative or non-speculative. I have heard of mining shares that were supposed to be equal to a life annuity—equal to Consols—but I am sorry to say the analogy is somewhat misleading. If that is confined, as the Minister indicated, to Government securities held, for instance, by insurance companies and investment companies, there would be not very much to say, but it leaves it open to a very wide interpretation as to the advances they may make on scrip. We know the board we have now, but we do not know the board we may have in the future. The bank may accept risks which, in wiser moments, it would not have accepted. It is authorized to make loans or advances on current account against the security of one-name bills of exchange or promissory notes secured by documents of title representing staple commodities having extensive and active markets to an amount not exceeding 75 per cent, of the value of such commodities at current market prices. I do not know particularly why the reserve bank should be given this power, why it should be considered that the ordinary commercial banks should not be likely to deal with this class of paper.

They won’t do it.

If they won’t do it, why should the reserve bank do it? It seems to me that we are giving powers to the reserve bank which are pulling it further and further away from its real function, and bringing it in simply as a competitor against the ordinary banks. I think that is a mistake. I think we are destroying the real character of the reserve bank. It is rather a peculiar fact that in Australia at this time they are busy with this same problem. They have there a commonwealth bank which has been acting as an ordinary commercial bank, except that it operates with Government funds and is a Government institution. Otherwise, it has been acting simply as an ordinary commercial bank, in competition with the commercial banks in the country. There, they are busy with the problem of creating a reserve bank. They are going in the opposite direction to the way in which we are going.

That is Bruce’s Government, not the present Government.

I do not know what the present Government is doing, whether they are carrying on this enquiry or not. But I even give Bruce’s Government some credit for business sense and understanding. It is a peculiar fact that they are moving in the opposite direction. I notice in a recent issue of “The Economist” that “The Economist” described the proposals made in regard to the Australian Bill, and said they were taking as a model the South African reserve bank.

They have not such an institution.

I know that they have not. I want the Minister to go slowly in this matter of opening the door to what I am afraid is an inclined slope. He is being pushed further in this matter than he has gone. No one wants to turn the reserve bank into an ordinary commercial bank, and I am afraid that the opening of a small door in that direction will lead to further openings, and will make it more easy to make the next advance. If you do that, you will still want a reserve bank to exercise a steadying and controlling influence upon the trade of the country. I think these are the main points to which I desire to call attention. There is, however, one further point. I notice, in Clause 3, a description of the things that the bank may not do. The bank may not advance money on mortgage of fixed property or on notarial or other bonds, or cession thereof, or acquire the ownership of fixed property, except fixed property required for its own business premises. That is all very good. There is a proviso that if the board is of the opinion that the value of any security held against any advance is insufficient, the bank may accept, as additional security, a mortgage on fixed property. That rather nullifies the prohibition contained in the first part of the clause. If it is undesirable to hold mortgages on fixed property, as security against advances, then it is undesirable to hold them in any form as primary or collateral securities. However, that is a minor point. I should like to suggest whether it would not be desirable to refer the Bill to the Public Accounts Committee for further consideration. This is a Bill which requires serious consideration, and I do not think the time occupied will be much extended if we send it to that committee. When it comes back from the Public Accounts Committee, it will probably go through this House without much further debate. I suggest to the Minister whether he should not move that this Bill, after the second reading, be referred to the Public Accounts Committee for further consideration.

When listening to the hon. member for Yeoville (Mr. Duncan), I was reminded of the French dynasty which learned nothing and forgot nothing. My hon. friend does not seem to have forgotten some of the economic mistakes of the past, or is he prepared to learn from the circumstances which exist at the present moment. For my part, although this Bill does not go any way in the direction, as far as I would like it to go, at the same time, I recognize that the hon. the Minister, although he does not concede the argument, has conceded to force of circumstances, and has taken a step, a very short but wholesome step, at any rate, and a step in the right direction. He has recognized the circumstances of the country at the present moment. He has recognized the fact that we are faced with a position where we only have in South Africa, in effect, two commercial banks, and he recognizes that these are not sufficient for the ordinary commercial requirements of the country. He has recognized that the reserve bank which was established has, as he has stated, two weaknesses. In the first place, it is so circumscribed with restrictions as to make it impossible for it to enter into ordinary business. It certainly cannot enter into any business with the public under the restrictions it has imposed. We are faced now with the circumstances, especially in the present state of depression, that it is necessary that greater facilities should be obtainable, both by the commercial and the agricultural community, than is possible under the ordinary banking arrangements. As I have read the Bill, I take it that the provisions of this Bill are brought to this House to cope with the present agricultural position in the country, and to render the subsidiary Bill which is to be introduced, effective. The hon. member for Yeoville has harped on the theory which authorities called on by the Government to report upon these matters have repeatedly shown to be wrong. He is nervous and opposed to the idea of the reserve bank, the bank of issue, entering into competition with the private banks. Let me tell him that Dr. Vissering, apart from the report that has been issued, submitted another report to the Government in 1925 dealing with the different aspects of banking in this country. In that report he clearly pointed out to the Minister that there are definite distinctions between ordinary commercial banks and the bank of issue. He said that the ordinary commercial bank is a trading company established for the purpose of making profits for its shareholders. That is the only object of the ordinary commercial bank of this country, to make profits for the purpose of its shareholders. On the other hand, the bank of issue always carries on its business in the direction of the public interest, and then later on he goes on to show the idea that the only object of the bank of issue is to be a bankers’ bank. He says that in South Africa especially the bank of issue is established with the only object of rendering assistance to the other banks. He goes on to say, further, that the whole idea that a bankers’ bank should not compete with the ordinary banks, in their ordinary business, is a fallacy which has been exploded, and that it is an entirely wrong theory. The difference between these two banks, the old commercial bank and the bank of issue, is not that the bank of issue is there merely to support the other banks, it is that while the reserve bank, which has been established to do its business is not to make a profit but to create the necessary credit facilities in order to enable the commercial and the agricultural community to carry on successfully in the country. A private bank is not concerned with regard to that, but unless it gives facilities, it will not make profits. Very often it happens that the private banks are more prone to give facilities for speculative purposes, owing to the higher rate of interest they receive, than they are to give credit facilities to agriculture or industry. At a time like the present, when there is a considerable amount of financial stringency, it becomes imperative to have a check on the powers of private banks, so that they shall not be able, by restricting credit, to check the development of the country and to deepen the depression. Unless some such step is established, as far as industries and agriculture are concerned, credit facilities will be restricted, industries may close down, and firms be forced to dispose of their products at an unprofitable price. It is essential to have a check on this sort of thing. The Minister is conceding something in that direction, but he should not be afraid of criticism, for what he is now doing was recommended in 1925. At the beginning of the session I pointed out how imperative it was that some arrangement should be made by which farmers should have facilities to tide them over their period of stress, and be able to hold their crops instead or being forced to realize them at a loss. The hon. member for Albert (Mr. Steytler), conservative though he may be, subsequently agreed that it was necessary to establish an agricultural bank. That, unfortunately, is not being done under the Bill, but, at any rate, the measure does something in that direction, for it is giving the farming community, in conjunction with the Agricultural Warehouse Bill, facilities to enable farmers to have greater credit than they can possibly obtain from the commercial banks. All the same, the amendments to the Act are rather circumscribed. The contingency arose years ago for the reserve bank to have a part in ordinary banking business. The reason that was given for not doing that is that the private banks are shareholders in the reserve bank.

No. I said they have to deposit large amounts with the reserve bank.

The Minister goes haltingly in the matter, but realizes that the necessity has arisen. I am glad, however, that he has recognized the circumstances, and having recognized them—unlike the hon. member for Yeoville (Mr. Duncan)—he has the moral courage to do things. I only regret that the Bill does not go as far as it should go. For instance, take the section dealing with loans and advances. I am very sorry that whilst provision is made under sub-section (f) for dealing with agricultural commodities, there is nothing more definite to enable the bank to give facilities to industries, as we have not an industrial bank. Equal facilities should be given to the reserve bank to enable it to help industries in the same way that we propose to assist agriculture. I realize that with the Bill as it stands, a great deal will depend on the board and the management of the bank. I believe that the managing director and the board of directors could, under this measure, do very useful work by affording greater facilities to agriculture and industries, although they are subject to the rules which govern ordinary banking institutions. I do not, however, agree with the Minister or with the hon. member for Yeoville, who spoke of the activities of the reserve bank. In my opinion, even under the limited powers it has, the reserve bank could have done more than it has done, if those in control really desired to do it; but, unfortunately, they take the view of the hon. member for Yeoville, that being a bank of issue it should have nothing to do with ordinary business beyond checking inflation by raising its rate of interest. Unfortunately, the reserve bank has no facilities for increasing the country’s credit. On the other hand, the commercial banks at least have their deposits, but the facilities they give are never in excess of the money which is continually being deposited with them by the public. I am not at all sure whether even with the power it is now proposed to give the reserve bank, that it will carry out what is expected of it under the Bill. At all events, I have seen no such intention on the part of the board of directors, and no attempt to influence the policy of the bank in order to act in the interests of the community as a whole. I would like to see, although I am not enamoured of a number of public servants being on boards of that kind, somebody like Dr. Bruwer, the chairman of the Board of Trade and Industries, on it, who has some knowledge of economics, and not necessarily that he should be there to force his point of view, but to see that the powers given under this Bill are carried out. If the Minister wants the Bill to be effective he will have to see that the bank carries it out. I congratulate the Minister on having had the courage, although he does not go very far, to go one step in the right direction, and I hope it is an indication that as he recognizes the circumstances he will carry his steps very much further towards having a state bank in this country.

When I look back for the last few years I think I am entitled to say there are three excellent legacies from their predecessors by which the Government has benefited; the first is the mining leases, one of which alone has brought in £13,000,000; the second is the mint, which after a few years’ producing has not only paid £500,000 for its buildings and equipment, but an additional profit of £250,000; and the third is this institution which we are discussing this afternoon—the reserve bank. I have been looking through its reports and find it has become a steady source of revenue to the Minister of Finance. I do not think it gives him the revenue he is entitled to expect, but in 1928 the Consolidated Revenue Fund received from the profits of that bank £46,495; in 1929 it had risen to £50,369; while this year’s working shows the amount has risen to £79,865. On the whole that is very satisfactory. The profits the bank is making are really enormous in proportion to its paid-up capital. The trouble is that, except on an occasion like this, when an amending Bill is brought up, we never get the opportunity of discussing its management, although it is a quasi-public institution. Its report is not discussed in the Select Committee on Public Accounts, and when we ask the chairman we are told it is no business of that committee and of the House. With regard to the other quasi-Government institutions like the Land Bank, the Electricity Supply Commission or the mint, we do get an opportunity of discussing their management; so that we have never had an opportunity of discussing on the floor of this House, much less in the Select Committee on Public Accounts, the extremely painful circumstances which arose some months ago, when an employee of the bank pleaded guilty in our courts to stealling £85,000 when in one of the branches of that bank. It appeared he was not in charge, but was a clerk, and over a period of months was able to steal, not in one sum, but in many sums, this very large amount. This created a very painful impression which would have made it advisable, had the circumstances permitted, to have it closely enquired into by the Select Committee on Public Accounts, because ultimately that £85,000 came out of the pockets of the taxpayers of South Africa. The residue of the profits of the bank goes to the Government, and it is quite easy to show that in the ultimate result this sum was stolen from the revenues of this country. Since that incident there have been references in the press to another very serious loss which the bank has sustained, or is reported to have sustained, with regard to a big insolvency in Durban. It is said that over an insolvency of a grain speculator there the bank stands to lose no less a sum than £180,000. The hon. member for Troyeville (Mr. Kentridge) was complaining that the bank did not extend its activities far enough; in this particular case it did, at any rate, extend its activities to such an extent that it held paper which resulted in this huge loss. One would like to have full information how this loss was incurred. We would like to have the opportunity for the Select Committee on Public Accounts to enquire into it. Let me for one moment go into the ways in which the profits of the bank are allocated. It is laid down in the provisions of the Act that after paying 6 per cent, preferent dividend, half of the balance goes to swell the reserve fund, a quarter of the remainder goes to the Government, and the other quarter goes to the shareholders to bring that dividend up to 10 per cent., and if anything is left over after that it goes to the Government, but as soon as the reserve fund has reached a paid-up capital of £1,000,000, all the profits, except the preferent dividends to shareholders, go to the Government. At the last annual meeting it was announced that the reserve fund had reached £600,000, and I see from the report that a further sum of £120,000 goes to the reserve fund, bringing it up to £720,000; so that we could anticipate in about two years at the most that the reserve fund will have reached £1,000,000, and that no more money is to be put into the reserve fund, and all profits after the 10 per cent, dividend has been paid to the lucky shareholders, will go to the Government. The net profits last year were £240,000, and this year they are just on £500,000.; the 10 per cent, will absorb £100,000 and every other penny of the bank’s profit will go to the Government. In other words, the reserve bank will become one of the primary revenue-producing factors in this country. The Minister may look for an income, if the present rate of expansion be maintained, of anything from £100,000 to a quarter of a million from this source. But when I look at the reports of the bank, I cannot but be struck by the lavish way in which the directors of that bank take care that the amount which ultimately reaches the Government is cut down to the lowest possible figure. Take their fixed property. They have spent no less than £169,000 on buildings for the bank in various parts of the Union, and not content with the ordinary writing-down process, such as commercial institutions adopt, they have indulged in extravagant write-offs. Properties which cost £169,000 within the past few years, have been written down to £81,000. You will see what I mean. Every penny of that write-off which was beyond the necessary amount, is money which should have ultimately found its way into the pocket of the Minister of Finance. Why he has allowed it to be done I do not know. Every penny spent on the furniture and equipment of the bank throughout the Union has been written down in the books of the bank to £1. It has all been paid for out of profits. To the extent to which the equipment has been purchased and paid for out of profits, instead of being paid for by a gradual write-off, the revenue of the country has suffered. If you look through their accounts, you cannot but be struck by the enormous amounts set aside for staff guarantee fund, pension fund, etc. This is a small bank, with a comparatively small staff, and they vote £13,500 in one year out of profits and £7,000 to the staff guarantee fund, all of which I have no hesitation in saying is at a rate far transcending that which any commercial bank would dream of applying. It brings to me an uneasy suspicion that this institution is making money so fast that it is trying to salt away as much as it can of its profits in funds of this sort. It has written off more than half of what its property has cost it. It puts away huge funds of this sort. The pension fund has reached £76,000. The widows and orphans fund is large, and the staff guarantee fund also. Why does the Minister not see that only a reasonable amount is taken from the profits of the bank for these purposes? I support the proposal of the hon. member for Yeoville (Mr. Duncan) that this Bill be referred to the Public Accounts Committee. It will give that committee an opportunity it should have of not only going through this Bill, but of enquiring into the working of the bank, and it will give us an opportunity of going narrowly through the principal provisions. I would ask the Minister to direct his attention to one or two particular clauses. In regard to Section (2) IV (d) loans and advances, it may make loans and advances on such non-speculative dividend or interest-bearing securities having a ready sale on the stock exchange as the board may approve for that purpose from time to time at intervals of not less than six months. If the Minister will turn to Section 14 (e) he will see that the bank may not make loans and advances for a longer period than three months. I have been rather puzzled in attempting to co-ordinate these two sub-clauses. Does the Minister mean trustee security? If so, the language is not at all apt. Supposing I come along to the reserve bank and say: “I hold these securities, will you give me a loan?” Either the bank must decide that the securities are sufficiently good to justify a loan, or the manager must say: “These securities are not on the list I have, and I cannot advance money on them.” If that is the case, it is an invidious task laid on the bank to separate the sheep from the goats. That list will become public. One company will say; “You can quite easily invest with us, because we have managed to get the imprimatur of the reserve bank.” It will be like the trustee security list of Great Britain, The board of this bank will make up its mind as to whether a particular institution is sound or unsound. That fact will get abroad, and it seems to me a very invidious task to lay upon them. I would ask the Minister what is the use of laying down that a bank may not make loans or advances for a longer period than three months. Surely that is an easy thing to be got over, because the period can be extended, just as a bill can be renewed. Then, in regard to 14a, the bank may not engage in trade or otherwise have a direct interest in any commercial, industrial or other undertaking, provided that this paragraph shall not prohibit the bank from accepting as security for advances or discounts any documents representing any interest in any such undertaking. What will happen if the bank has to call up its loan? Even as the clause stands, the bank may lend money on the security of an undertaking, or an interest in an undertaking, and yet, virtually, it may not call it up because the undertaking, being a going concern, it is not able to run it. I feel that I am on strong ground in supporting the hon. member for Yeoville (Mr. Duncan) in his appeal that this Bill should be sent to a select committee. In regard to the dividend, their earnings are three or four times the amount necessary to pay that dividend, and they know the profit after that goes to the Government. The net profit this year is £300,000. A sum of £100,000 is all that is necessary to pay dividends, and after the reserve fund has reached maturity, the balance goes to the Government, so that the real persons concerned are the taxpayers of this country and the Minister of Finance. Yet the Minister does not appoint three directors out of the eleven. He can nominate the governor and deputy-governor only, and there is no machinery by which the taxpayer can enquire into the functions of this bank. All I know about the working of that bank I learned from its published report in the newspapers. I am disturbed, as the Minister must be, at the largeness of the sum which this bank is spending in the way I have indicated, but there is no means open to us to enquire into it— only the opportunity I am availing myself of this afternoon.

The Nationalist party is often accused of not fulfilling its promises made during the election. Undoubtedly that is not a fact. If there ever was a party in office that has fulfilled its promises, then it is the party that is now sitting here.

What about the state bank?

That is just one of the things about which I admit a little guilt. The hon. member mentioned it, and I hope that he will support us if he thinks that we ought to take steps in that direction.

Are you in favour of it?

I will not say that I am in favour of it, but undoubtedly a promise was made that we would institute a full enquiry into the working of a state bank in South Africa, and I fear that we have not properly carried out that promise. Only recently I took the trouble to read the evidence given before the Vissering Commission. Mr. J. G. van der Horst, an economist of whom we may be proud, said in his evidence that in 1821 there was no more effective battle-cry of the Nationalist party as that of a state bank, and he said that if the Reserve Bank did not act more effectively in the matter, and provide for the needs of our banking system, the cry for the state bank would be irresistible. That is just what we want, viz., that the Reserve Bank should act more effectively because we find the demand for the state bank is becoming stronger and stronger. We therefore want proper enquiry. There is, e.g., the Lank Bank, an institution of which we are justly proud. The Government renders the funds available, and in that sense it is practically a state institution, but the Government does not manage it; that institution only makes provision for long term loans to the farmers. We do not want that, and here also the needs of the country are not properly provided for. I do not know what the position was in other parts of the country, but a promise of a proper enquiry was given in the Transvaal and I fear that we have never kept it. One feels also that it certainly ought not to be such an impossible matter to provide in connection with the two banks in South Africa that they should not exercise the great influence they do at present. They are so powerful that they do what they wish. They fix the rate of interest just as they like, and act as if no one else had any say over them. When we feel that every citizen of the country is affected by the monopoly we also feel the necessity that we should see to it that there is no abuse of the powers that they hold to-day. The two great hanks in the country each have more than 500 blanches in the country, and there is not the least competition. The banks do not compete against each other. There is the nicest co-operation; the rate of interest is the same, and one bank does not even take over customers of the other except for special reasons. There is, therefore, the greatest co-operation between the commercial banks, and then the question arises whether the Reserve Bank, which we established, actually answers its purpose. I fear that up to the present the Reserve Bank has not done so. 1923 the position was practically the same as it is to-day, and there were only the two large banks except the Netherlands Bank with its few branches. As then we had the two banks, the object surely was not merely to provide that the reserve of the two banks should be paid into one fund. I can understand the necessity for that existing in America, where there are 20,000 banking institutions; there, there will be the necessity for a central fund to centralize the reserve fund in one great central fund. That is, however, not the case in our country with its two or three banks. It was undoubtedly not necessary merely for that purpose to create a reserve bank. The object undoubtedly was that we should get proper control over the credit in our country, and that object has, up to the present, certainly not been realized. Where we, e.g., gave the monopoly of issuing notes to the bank, we could have expected the bank to do its duty, its first duty—which, according to the Vissering Commission, was to serve the public. Has the Reserve Bank hitherto served the public? where? We have heard of the great profits that have been made, but in what way has the Reserve Bank served the public? In what way did the bank control our credit? I fear that duty towards the public has not so far been fulfilled. The bank obtained great concessions. The first concession was that the Reserve Bank would be the Government bankers. The Government would deposit all its funds in the Reserve Bank, and all the departments and the provincial administrations have the Reserve Bank as their banker, in addition, the other banks have quite correctly been compelled to deposit a certain reserve fund with the Reserve Bank, and the amount stands at £5,000,000 to-day which bears no interest. That is a great privilege to the Reserve Bank. We have granted great privileges but the object surely was not for the bank to make large profits. The object was surely not merely to make profits. The shares were issued at £100, and I believe that to-day they stand practically at £200, and they continue, notwithstanding the depression, and everything else, to pay a dividend of 10 per cent., and the reserve fund amounts to about £600,000. We are glad and proud about it, but that was not the object for which the bank was established. We must, therefore, see that the bank is made more effective and in that connection we must institute enquiry. One thing the bank has done; it kept the National Bank, when that bank was in difficulties a few years ago, on its legs, but although it assisted the bank as such, and greatly assisted the shareholders, it was not of very great public importance. I have here the last weekly report of the banks, which gives us a view of the position, and allows us to see how things stand with the bills which the Reserve Bank has discounted. We find that the Reserve Bank has, up to the present, invested in foreign bills the sum of £6,529,810, but only £1,609,179 in South African bills. Most money has therefore been invested abroad, in this connection. This also shows that the bank cannot do much by increasing or reducing its own rate of interest. With such a small amount on the market it exercises no influence, whether it discounts or not. Here we find that measures have to be taken for the Reserve bank to do more in relation to the commercial banks. The commercial banks, especially the Standard Bank, are so strong that they practically do not need the Reserve Bank. They cannot be forced, and whether the Reserve Bank raises or reduces its rate of interest does not concern the commercial banks. They can act as if the Reserve Bank did not exist. Although that is the position, one still thinks that the Reserve Bank could have made its moral influence felt more regarding the rate of interest. This is where I want to criticize the Reserve Bank, and even to find fault with it. It fixed its rate of interest at a high level, and still maintains it at that to-day. I, personally, can see no reason why it fixed its rates so high. The Reserve Bank could not compel the other banks to reduce their rates, but it could have made its moral influence felt. In this connection I should like to ask a question. I have been told that at the same time of the creation of the Reserve Bank there was a I gentleman’s agreement” that the Reserve Bank should no compete with the commercial banks in the country. I should like to know if that were so, and whether our Reserve Bank is bound by that “gentleman’s agreement,” so that it does not have a free band to compete with the other banks in the country. Is that the reason why the rate of interest of the Reserve Bank remains so high? In England the rate was 6½ per cent., but it dropped to 3 per cent., and I think even to 2½ per cent.

No, it is still three per cent.

Very well, I was not certain of it, but there was a prophecy that it would be 2½ per cent. I would like, however, to have a statement as to why our Reserve Bank increased its rate in August to 6 per cent., with the result that the commercial banks followed its example. We were already aware then of the position in our country, and that there would be no speculation, but a curtailment of business. We were already warned about it in August, and there could have been no question of a spirit of speculation. Nevertheless, the Reserve Bank raised its rate. If, however, it was the view, at that time, that there would be speculation, then that is no longer the case to-day, and why is the rate kept at that high figure? Another point on which I would like to have information is why the exchange on bills is 6 per cent., while in the case of agricultural bills it is per cent in the case of six months bills? I think we ought to have information about that. We are all glad that the Minister of Finance has tried to make the Reserve Bank more effective, and I fear that this Bill does not yet go far enough, and that it will not meet the wishes of the public. The public expects more than these amendments. What the public wants to see everywhere is that there should be more competition between the banks in our country because there is practically no competition between our commercial banks. We formerly had in this country a National Bank a Standard Bank, a Bank of Africa, the A.B.C. Bank, the Natal Bank, and the Netherlands Bank, but to-day we have practically only two large banks, and the Netherlands Bank, and they work together, so that there is practically just one bank operating in our country. There must, therefore, be machinery so that we can exercise control on our commercial banks. Why do they charge such a high rate of interest? It is 8½, and 8 per cent, It is abnormally high, and the highest in the world. It is because there is no competition, with the result that the banks pay dividends of 16 per cent, to their shareholders. The shareholders get the benefit and the public have to pay for it. The Government of South Africa must do its duty to the people, and see that this state of affairs does not continue, because the banks pay no interest on monies deposited to current account, and they do not give any credit which is effective in agriculture. During the enquiry that took place here by Dr. Vissering, and Prof. Kemmerer, Mr. Clegg himself suggested that a commission ought to be appointed to enquire into agricultural credit. The commission then appointed had to report within a month, and it was impossible to deal with this side of the question as well in that time. Mr. Clegg admitted that it was desirable that enquiry should be made about supplying effective credit to agriculture, because the commercial banks with their short term credit did not meet the needs of the farmers. The commercial banks give credit for periods of three to four months, and the farmer cannot pay in four months. It is really time that a proper enquiry should be made into this matter. Consequently, as a Nationalist, I feel that I am not called upon to move amendments to this Bill, but to appeal to the Minister of Finance to appoint a commission that can enquire into the competition between the commercial banks, and to find means and to make provision for credit facilities for the agricultural population. We find that the dividends of the Reserve Bank are limited to 10 per cent. Even the fees of professional men are restricted, but no restrictions are placed on the commercial banks. They can make as large profits as they wish, and they do not even come under the Usury Act. We feel that this ought not to be so, and that we ought not to allow the commercial banks to make such enormous profits out of the public. I want the House to go further than this Bill, by asking the Minister to appoint a commission who can make a thorough investigation and make a report on which we can take action.

The Minister of Finance has had two shocks to-day. The first was administered by the hon. member for Troyeville who described the Bill as a very timid advance towards the establishment of a state bank, but the Minister had a still more considerable shock from the hon. member for Pietersburg (Mr. Tom Naudé) who openly welcomed the Bill on the ground that it was the first instalment in the carrying out of his party’s promise to institute a state bank.

It was not a party promise.

The hon. member for Pietersburg said it was a promise of the Nationalist party in the Transvaal. These remarks are rather illuminating when one remembers the sturdy way in which the Minister of Finance has stoutly held out against the establishment of a state bank. When we look back ten years to the time when the bank created by the late Government, we realize that one of the best Bills that that Government ever introduced was the measure which founded the South African Reserve Bank. The work of that bank has been of the very greatest benefit to the Union. Within two years of its creation the country might have gone through an exceedingly troubled financial time owing to the difficulties of one of our banks had it not been for the existence of the Reserve Bank, and but for that terrible financial consequences would have involved the whole country. If only for that alone, I say the bank has done very good work. I should like to repeat the expressions of great praise we felt bound to give at the time of the debate on the Bill of 1920, expressions of thanks due to the great services rendered in regard to the passing of that Bill and to the determination of the terms on which the bank was created, to those who, with great financial skill, expert advice and great ability, assisted us. I would like to mention in this regard Sir Henry Strakosch, whose great financial knowledge and advice has been recognized in very high financial circles in the world. May I also refer to the great services given by those officials of the Government from the Treasury, who were in attendance on the committee and helped very materially in connection with the passage of this Bill in a very good form indeed As far as the creation of the Reserve Bank was concerned, that committee very deliberately set out such provisions in the Bill as would prevent the bank as far as possible from entering into ordinary commercial banking business, and they did that for two reasons. One was, it seemed rather rough on the banks that the Reserve Bank should be established by the Government— largely by Government money, and supported and guaranteed by the Government—the banks then existing being, however, bound to contribute 50 per cent, of the capital. It seemed that it would be particularly unfair if the bank should be allowed to enter into competition with these banks in ordinary commercial banking business. That was one reason; but although important, it was not the great reason. The great reason was that the Reserve Bank should occupy a detached position in banking business, and should be apart from the ordinary risks and errors of banks. It should stand by the country if the errors of the banks were leading the country into financial trouble. While one recognizes that the restrictions put into the Bill were not the last word, and that experience should teach the country and the banks what alterations should be laid down, yet I do say I am afraid the Minister of Finance is going on dangerous lines when he is extending the power of the Reserve Bank to go in for ordinary commercial banking business; especially for the reasons which he gave. Once the Minister has taken these steps, he is exposed still more to the pressure which will be exercised by people like the hon. member for Troyeville (Mr. Kentridge) and the hon. member for Pietersburg (Mr. Tom Naudé). Having departed from the rather stringent rules laid down, and taken much wider power for the bank, there will be a tendency for the bank to wish to go in for more competition in ordinary banking business. The principle the Minister laid down is likely to lead to trouble. In other words, there is a danger of the extension of the speculative and risky side of banking, as far as the Reserve Bank is concerned. I want to touch on the other main point of the Bill, and that is as regards the note issue. That I view with considerable concern. I think the Minister is taking a very backward step. Incidentally I am not quite sure what the wording of the clause in the Act of 1920 will be, if the amendment is passed. It is evidently proposed, however, to take away all need for security as far as the 60 per cent, is concerned. In other words, the only security for the note issue will be simply the 40 per cent, of gold. When one thinks of the reason why Clause 17 was put in, the principal Act in 1920, one sees the dangers that can arise out of such a state of affairs. There had been a very grave over-issue of notes by the banks under their unrestricted powers: with the result that grave inflation was either caused or greatly facilitated thereby. After that experience I think that it is a very risky step to take now, to take away this 60 per cent, of the security. You are taking away the greater portion of the restriction on the issue of notes. The issue of notes must be a very profitable thing, but unless there is a safeguard by which these notes cannot be issued beyond the limit of actual security in the bank, then I think we are on dangerous ground. The Minister of Finance has referred to banks which have as low a reserve. I do not know whether the Minister is referring to the constitution of the American banks or other banks. Could he refer to the banks the constitutions of which have such a low protection against note issue as 40 per cent.

The banks of Denmark, Holland, Greece, Bulgaria, Italy and Germany.

With the exception of possibly Holland, I am not prepared to admit that the financial position or banking position of any of these states provide any justification for us to copy their example, especially as we have found that the provisions of our Act of 1920 have been successful and sound. The Act has limited credit. But the next step may be that indicated by the hon. member for Troyeville (Mr. Kentridge), who wants facilities for unlimited credit or that of the hon. member for Pietersburg (Mr. Tom Naudé), whose idea is that the bank should facilitate extensive agricultural credit. Agricultural credit, as I think, should be dealt with on its own basis; whether by the land bank or an agricultural bank or otherwise; and if you are going to look to the reserve bank to provide for agricultural credit you are asking for trouble. Once we remove the 60 per cent, the temptation to yield to pressure to develop in this way may be a very serious thing. The danger is greater when you have this weakening of the note—protection combined with the enlargement of the bank’s powers to do business at such a time as we are facing. I regret that I cannot agree that the removal of the 60 per cent, would be beneficial. On a smaller point, I am glad to see that there will be control as to the use of the word “bank”, because there are numerous cases in which serious harm could be done by the improper use of the word “bank”, On the question of restriction on the bank’s business, and the note issue, I should have liked this Bill to be sent to a select committee. Very vital principles are being adopted here on technical points, and the House ought to have the advantage of consideration by people who have expert knowledge of these matters. But I hope that the hon. Minister will at least consent to the Bill going for the necessary consideration to the Committee on Public Accounts.

When the hon. Minister was addressing the House, I interjected the question which seemed to rouse his ire against me. I do not know why. I simply asked for information as to whether the banks were aware of the conditions in this Bill. I think he should have enlightened the House, but, apparently, he did not consider it worth while to answer my question. I, therefore, assume that the banks are not aware of the terms of the Bill. In the last report issued by the reserve bank I see no reference whatever to the fact that this Bill was to be introduced. In the original Act, introduced in 1920, provision was made that certain banks then existing should be compelled to subscribe their portion of the capital of the bank. Clause 10 imposes a liability against these banks if they do not subscribe the money. It says that if any such bank fails to subscribe its portion of the capital within the prescribed time it shall incur a penalty of £500 for each day during which the default continues. These commercial banks put a large amount of money into this institution. I do not suppose that information has been given to them that it was proposed to introduce a Bill of such a far-reaching nature. Under it, it is proposed to extend competition. Originally, bills could be discounted at 90 days. It is now proposed to discount bills up to 120 days. True, the commercial banks have shares in the reserve bank, and they get 10 per cent., which is a nice little profit dividend. It is, however, incumbent that the House should be informed how far the banks were aware of this Bill and of what line of action they would take. I want to know whether the banks were aware of the conditions of the Bill.

Yes, they are aware of it.

Then why did the Minister not say so at first? In view of the fact that the banks are aware of the contents of the Bill, I think that much of my argument falls away. In any case, I support the suggestion very strongly that this Bill should not be rushed through this session in the last days of a dying session, and that it should be referred to a select committee.

Our reserve bank system is, perhaps, one of the best institutions in recent times for maintaining an economic equilibrium. It is our best safegaurd against slumps, against booms, and against all kinds of political disturbance and financial disturbance It has been considered by Australia and other countries, and it has been stamped as being an excellent institution. The reserve bank set up machinery in 1920 in order to function efficiently. The result has been somewhat disappointing. It is anticipated that the bill system would grow, but on the contray the overdraft system has prevailed, and this has become a worse evil.

That is not the fault of the bank.

I do not say it is the fault of the bank. The system is becoming worse. It is a system which is causing embarrassment and trouble to all sections of the people in South Africa. It is a very great pity indeed that accommodation in the form of bills has not been adopted, for the bill system is a system which prevails throughout the civilized world, particularly in countries where you have a highly-organized monetary system, such as England and America. Dr. Vissering made certain recommendations regarding the enlargement of the operations of the reserve bank.

Business suspended at 6 p.m. and resumed at 8.5 p.m.

I move—

The main object of this Bill now proposed by me is to give our farmers an opportunity to get credit at the banks, moneylenders and other persons on the security of warehouse receipts, i.e., where a product is placed by a farmer in a certificated warehouse which complies with the conditions of the Act, he would be able to get a loan on the warehouse receipt. The second object is to make the dealing in agricultural produce easier by doing business in those negotiable receipts. The third object is to get accommodation for the storage of agricultural produce until the farmer, or the owner has an opportunity of disposing of them. The produce market is liable to fluctuation, and sometimes it is not advisable for a farmer to sell his produce immediately. The farmer will now be able to get credit on that produce put into the warehouse until such time as the market has improved, or he can sell his produce. I can say, without hesitation, that this Bill meets a need which has long been felt by farmers. During the last quarter of a century economic conditions have changed very much, and in many respects economic life is handicapped by laws and legal principles which were necessary in a time of bad traffic, but which, in our time of modern traffic conditions, are no longer applicable. When in the past a farmer wanted to get credit on his produce the moneylender had to be put into possession of that produce. In the present circumstances that necessity will no longer exist. However good the Roman-Dutch law was in the past—and it Is possibly good to-day with regard to certain articles like factory produce —I think it is obsolete to-day with regard to agricultural produce. An easy way must be found to enable our people to sell their produce. Take, e.g., the man who takes 1,000 bags of maize to the grain elevator, and they are kept there, together with the produce of other farmers, and he can later take them out again, if to-day he wants to get credit on that maize he must take it out of the elevator and deliver it to a man, otherwise he has not enough security. The man who lends him the money possibly does not even have adequate or suitable storage accommodation, but yet he must take the produce into his warehouse. We now want to get rid of that difficulty to allow the produce to remain in the elevator, while it is, nevertheless, negotiable to other persons. The bill amounts to this that the farmer gets a negotiable warehouse receipt on which he can get short periods loans, while the bank will lend the money get better security than what they have had in the past. I now want to quote briefly what Prof. Kemmerer and Dr. Vissering recommended in 1925 when they investigated our Mint. They said that a Bill like that now proposed was very desirable. Other countries had for long had such legislation. In connection with this point I want to make a short quotation from the report. The report says—

I would like to emphasise the last part. The Commission state—

I particularly stress these words because hon. members have come to me and said that they, who have worked hard to put the co-operative societies on a good footing here, fear that if this Bill is passed the existing co-operative system will be encroached upon. We see here that the experts recommend such a step, and that they say that the co-operative societies will be assisted by legislation of this kind. Hon. members will see at once that three classes of warehouses are recognised by this Bill, when they are duly licensed. There are, in the first place, the grain elevators, and in the second place, the co-operative warehouses that can get licences. If, therefore, a co-operative society gets a licence for its warehouse, and fulfils the requirements of the Act, then it immediately gets the right to accept the property of farmers, and this will immediately bring the co-operative society more into touch with the people. The third class of warehouse is the cold storage. We do not, however, stop there. We must be careful that warehouses do not arrive everywhere in our country like mushrooms, and that they do not compete with each other. The Bill, therefore, provides that the Governor-General from time to time can proclaim places where there may be warehouses. It will first have to be properly investigated whether more warehouses are required in a particular area. Suppose, e.g., that there is a grain elevator, and a proper co-operative warehouse in a neighbourhood, then it would be detrimental to allow another warehouse to be erected there to compete with them. It is not the object of this Bill to flood the country with warehouses, and it will not be permitted. To attain this purpose the Bill provides that the owners of warehouses must give a guarantee for the proper fulfilment of their duties. The Minister gets the power to have warehouses inspected, in respect of which licences are applied for, and the Governor-General is given the power to make regulations about the buildings to be used as warehouses. The warehousemen also are obliged to keep proper record. If all these requirements are complied with then a licence is issued to the warehouseman, and then he can issue warehouse receipts which are transferable; recipts in respect of the produce which he had received. Clause 12 deals with the warehouse receipts, and it is one of the most important clauses in the Bill. To be of value as a negotiable instrument such a receipt must comply with definite requirements and these requirements are set out in this clause. The receipt must state the name of the warehouseman and of his warehouse, the date of issue, a number, the name of the owner of the produce, and it must also contain a description of the kind and quantity of the produce. The receipt must be properly signed, and on the back there must be room for endorsements, because the receipt is negogtiable to a second or third person. Clauses 17 to 22 practically repeal the existing law with regard to the negotiability of such receipts, i.e., the Roman-Dutch law which, up to the present, has regulated such-negotiation. In the first place it is laid down that tile warehouse receipt will not only be transferable to a second or a third person, but also from a third to a fourth, etc. I do not think that it is necessary for me to go into the details and the subordinate points. Clause 19 (b) provides that a receipt can be used as security for a loan. I have already said that when a person wants a loan on his goods then he must be in possession of that. It is provided here that he can borrow the money and can endorse over the receipt as security. He can, therefore, borrow the money from his friend and cede the receipt to him. When that friend gets short he can in turn cede it to another, and so they can go on until the receipt is paid, because the goods have been sold, or until they are otherwise redeemed. I would like to add that the Bill will not damage co-operation, but will have the opposite effect. We know that co-operative societies in the past have made advances to their members. It happened when some person or other went bankrupt that the co-operative society, although it had received his property, did not have the right, according to the decision of the court, to attach that property. The property was divided amongst the creditors, and the co-operative society also, therefore, suffered loss. If the co-operative society had a warehouse receipt, and the person went bankrupt when a warehouse receipt is issued to him, the co-operative society, or the possessor of that receipt cannot suffer loss, because the produce is security for the receipt, and no attachment can be made on it. It is not divided amongst the creditors, but it is the property of the owner of the receipt. We are, therefore, trying to make provision for this contingency, so that the co-operative society shall not suffer damage in this manner. There is however, another difficulty in connection with co-operative societies; hitherto they went to the Land Bank and asked for an advance on produce which they had received from members. I am pleased to say that they acted honestly towards the Land Bank. There are no cases where co-operative societies have not acted honestly, but the Land Bank now gets much more security, and so do the moneylenders, because the receipts are a guarantee that the property cannot be alienated from the owners unless the owners have abandoned it, or sold it. I just want to point out a condition in Natal. There is an association there which farms co-operatively. The association provides its members with fertiliser, etc., but the court holds that they have not the right to the produce as long as it is on the land, but as soon as it is harvested any one of the creditors can come and attach it. Under the Bill the provision is now made that such a co-operative society that makes advances to farmers who are farming jointly shall be indemnified against such persons taking possession of the goods. Clause 24 is also important. The railway administration can at present, by means of its grain elevators, export maize, but when they carry maize in bags people who export or buy the maize have to get advances for that export. Hitherto the people have not had securities, but now the Railway Department will issue receipts so that the grain, which will usually be maize, will be a guarantee that the moneylenders will be repaid when maize is shipped overseas. This will, therefore, help the maize farmers as well. Clause 25 is of importance because we there interfere a little with the security of the railways, because it somewhat curtails their right to pledge, but I may say that the Railway Department and my department have consulted each other and that full agreement has been reached. The railways do not suffer, and the persons advancing the money, as well as the railways, are properly covered. The Bill has been published and has met with general approval. There was a conference of interested persons which was attended by representatives of the Reserve Bank, the Land Bank, the commercial banks, the Chambers of Commerce, the cold storage people, the S.A. Agricultural Union, the Department of Finance, the Board of Trade and Industries, the Railway Administration, and the Agricultural Department. The conference unanimously decided to agree to the Bill. Probably there is a little point here and there which might be altered, the Bill is complicated and even the legal advisers say that it is difficult from a technical point of view, and if hon. members wish it will possibly be a good thing to send it, after the second reading, to a select committee consisting of financiers and people of legal knowledge in this House, who can examine the wording and put it in such a way that no misunderstanding is possible. The select committee can dispose of the Bill within a few days.

Lawyers in a few days?

They may possibly require a few more days, but it will not take a few months. If we postpone the passing of the Bill I fear it will be disastrous in the bad circumstances that are now prevailing, especially is it necessary in the interests of the maize farmers for the Bill to be passed as soon as possible. Millions of bags will have to be exported this year, and the people can then be assisted while the moneylenders will have security. It is not necessary for the select committee to take evidence because the bank, the merchants, the co-operative societies, and the people in general are satisfied.

I do not think there will be much difference of opinion about the principle of this Bill or about the desirability of the Bill. In principle, the measure is a good one, and in a sense it is long overdue; we should have had it years ago, mere may, however, be some differences of opinion as to the details. When I say that generally I approve of the principle of the Bill, I do not wish to pledge myself as to the details which, I think, ought very carefully to be scrutinized, and therefore I am glad to hear from the Minister that he is prepared to let the Bill go to a select committee for further scrutiny. I say this because I can see from the nature of the Bill and from its general provisions—although, I must admit, I have not studied this very carefully—that it is quite clear that this is the sort of measure the details of which require looking into very closely. Although my hon. friend the member for Frankfort (Mr. Wessels) has made his usual jibe at the lawyers, I believe this is a case where the lawyers will have something to say. Under the Roman-Dutch law, title passes by possession and the very intention of this Bill is to do away with that principle of the Roman-Dutch law, and to provide that ownerships shall pass by documents of title, and such evidences of title. We are, therefore, concerned with a Bill which purports to alter the Roman-Dutch law. It has always been found very difficult to do that, and, whenever these matters come before the law courts, there is always a strong tendency to interpret an act in the light of the common law, and to refer to the principles of the Roman-Dutch law whenever there is any discrepancy or uncertainty in the law. It will, therefore, be necessary to scrutinize this Bill most closely, to see that it actually does carry out the intention which the Minister has in view. It would be a very good thing to send the Bill to a select committee, and to have on the committee some competent lawyers from both sides of the House, so that they can examine the details very carefully and see that there is no doubt about the legal effect of the measure. The Minister mentioned a recent case where the action of one of the credit societies was upset by the court, simply because the court proceeded on the general principles of the Roman-Dutch law, and, therefore, did not recognize the title which the society claimed. In a matter of this kind, which is of very great importance to the agricultural community, it is necessary to remove all doubt and uncertainty. Another matter which requires very Close attention is the definition of “warehouse.” I think the Minister has been wisely advised to recognize the elevators, the cool stores and the stores of the co-operative societies, but power is taken to recognize other stores, and the Minister will find as soon as the Bill is through, that applications will be made from all directions from people— dealers, storekeepers and so on—all wanting to take advantage of this measure by having their premises declared warehouses. A good deal of care will have to be exercised for, otherwise, very grave abuses may creep in, which may destroy the utility of the Bill altogether. A warehouse should be recognized only when the department is quite satisfied about the bona fides and the character of the owners. As I said, about the principle of the Bill there can be no doubt, and the measure has been long overdue. The principal difficulty with which the agricultural community has had to cope for many years is the question of agricultural credit. Apart from land recognized by the Land Bank Act and otherwise, the farmer has found it very difficult to give security for advances, and the question of agricultural credit, in this country especially, has been a most difficult one. The farm produce has never been of such a character, or in such a form, that it could be held as security, and we have also the provisions of the Roman-Dutch law which make the point even more difficult. Now, for the first time the matter is tackled, and if the Bill is carefully framed and is made water-tight, the result will be that to a large extent we shall solve the question of agricultural credit; the farmer will be able to bring his produce to a warehouse, get his note or receipt, and that will be a document which is negotiable, and enable him to raise the necessary advance. I think the Bill, if it is carefully framed and really effects its purpose, will to a large extent solve this question of agricultural credit which has proved so difficult in the past. I know there is a feeling amongst some of the co-operative societies that this Bill is going to make inroads into their province. I do not share that opinion. I think this Bill by recognizing the stores of co-operative societies as warehouses, where These documents of title can be issued will help them. The Bill must prove helpful; co-operative societies will have their documents of title and their paper, which they can take to any commercial bank or to the Reserve Bank, which will entitle them to advances up to 20 per cent, of the total discounts of the Reserve Bank. The co-operative movement is going to be promoted and helped by this Bill because one of the main difficulties co-operative societies have had to deal with in the past will be removed. They have their assets, mealies in their stores or whatever stuff they may have of their members, but have had difficulties, mostly legal, in getting advances thereon. Now they get the right to receipts which will be documents of title, negotiable, and will enable them to raise the money they want. I see there is another form of security instituted in this Bill in rail surety notes. I do not know what the object of this is. It appears that the railway may give surety notes with regard to produce in the elevators, and these will also pass as documents of title. I do not know what necessity there is for these notes.

Mostly in cases of bags of mealies which are exported.

I think the Bill in principle is good and very necessary, especially in the difficult times we are approaching now, and it will be most helpful. I hope the lawyers will so scrutinize the details that it will not lead to legal action and further trouble.

If the leader of the Opposition (Gen. Smuts) is right in saying that this Bill will not be very detrimental to cooperative societies, but will, on the contrary, benefit them, I shall be very glad, and will welcome the Bill. I want to say that I do not quite welcome the Bill, but I am a little uneasy because I fear the Bill will injure co-operative societies. I shall be glad to learn that I am wrong, but that is my feeling, and I am not afraid to express my views although I am, of course, always open to conviction concerning a different view. It is a great advantage in our present law that it encourages co-operation, but this Bill possibly discourages it. According to this Bill, anyone can put up warehouses, and that may do harm to the co-operative system, and I would not like to see that. As a farmer, I am here to do everything in my power to assist the farmers and I hope the Minister will bear this point in mind. Even if I do not always agree with the Minister I still admit that he has done a great deal for co-operation, and I hope that he will do his best to pass a measure which will advance co-operation. Then there is another matter I am afraid of. There are possibly not many members in the House who will agree with me, but I hope that eventually the farmers will have their own farmers’ bank. I have often discussed this view at meetings, and I have come to the conclusion that the idea is gaining ground, but if it is made so easy for the farmers to do business with the ordinary banks then I fear that that ideal of mine will be put a little further away from realisation. The Minister and hon. members laugh, but I am convinced that if the farmers of South Africa want to maintain themselves then they will have to put up their own banks, and when that has been done I will welcome a measure like this.

I, too, will welcome this Bill on all grounds. I think it will facilitate this position of farm produce and generally be of benefit to the commercial community as well; but I think that the warning given by the right hon. member for Standerton (Gen. Smuts) must be borne in mind. The innovations of the common law introduced by this Bill are very far-reaching indeed, and I think the Minister is to be congratulated on having agreed at once to a select committee to consider the Bill in detail. The matter raised by the hon. member for Albert (Mr. Steytler) is also a very important one. The matter seems to me to centre round the new document of title which has been created, the warehouse receipt, which is to be made negotiable, and which it is hoped will be freely pledged, bargained and sold and passed from hand to hand. That makes the position of the warehouseman a critical one. He is bound to deliver the goods represented by that receipt when the receipt is presented. That is a very grave responsibility. There is a possibility of the destruction of the goods without any negligence on his part. That is not provided for in this Bill, and, as I read it, the warehouseman would have to accept the liability of delivering the goods however the goods were destroyed. That would be a great responsibility for him to undertake. Then again there is the responsibility of endorsements on this title being forged. Again, there is no provision for that in this Bill, nor does it appear that the draughtsmen have considered what the consequences of a warehouse receipt with a forged endorsement would be. I take it that if he delivers the goods to the holder of the bill with a forged endorsement he would be responsible to the owner again. That matter will have to be very carefully considered in select committee. It is not easy of determination, because if the warehouseman is to relieved of the responsibility under these circumstances, the warehouse receipt becomes less valuable to the banker. The position becomes all the more important because, under the Currency and Banking Bill, which the House has been discussing this evening, it is foreshadowed that it will be no small part of the business of the Reserve Bank to make advances on documents of this kind. If the bank cannot rely upon the documents of title being an absolute guarantee that the goods will be forthcoming at the right time, the Bank will be shy of advancing money freely upon them. I think it is right to indicate what I think is a very critical portion of the Bill, the position between the banker and warehouseman under the circumstances which I have indicated by way of illustration, and many other circumstances of a similar character which will readily occur to anyone who has handled commercial documents of this kind. I think the way out will be to consider all the possibilities, and then to get as near a cast-iron draft as you can. That is the business of the much abused lawyer. If you give the lawyers a fair chance, they should be able to produce a document which will stand the test, in the same way as the Bills of Exchange Act did. I am glad to see the Bill introduced, and I am glad that it is to be referred to a select committee, and I hope that the danger indicated by the hon. member for Albert (Mr. Steytler) of injury to the co-operative societies will not be realised. I think what is good for the farmer will be good for the co-operative societies, and that what is good for both of them will be good for the business community and the general body of consumers.

I also am glad that the Minister has agreed to refer this Bill, after a second reading, to a select committee, because I feel we must be careful with this legislation that we do not possibly do something which will be damaging and detrimental. I also feel that we must be careful, but not for the same reason as the hon. member for Standerton (Gen. Smuts) and his legal friends, I sympathise with the views of the hon. member for Albert (Mr. Steytler) and I therefore hope that the Minister will not put only lawyers on the select committee, but also practical farmers, who will see that steps are not taken which may possibly be injurious in certain respects to existing farming establishments. The Minister’s object is to render services to the farmers by this Bill. The first object is to supply warehouse facilities to the farmer, and to enable him to get credit on the basis of warehouse receipts. There are two ways in which we are giving credit facilities to the farmers; the first, is by way of the farmers’ organisations. Hitherto we have followed that method in our legislation, and this service was rendered to the farmers by means of the co-operative societies. Hence all our legislation went in the direction of supporting the co-operative movement, so that by means of co-operative societies this privilege could be given to the farmers. Every Act we pass must be complementary legislation, subsequently to lead to the better carrying out of that system, and it must not be legislation which might destroy that system, or injure our co-operative societies. Hence we must see that this Bill, now before us, is also complementary. Co-operation is very difficult in our country in consequence of three factors; the first is the restricted local market; the second is the long distances, and the third is that our farmers, on the whole, do not belong to the well-to-do class. It is consequently necessary to help on co-operation in our country in every respect and not to destroy it. How far this Bill will inter free with the interests of co-operation must be gone into in the select committee. I readily admit that the Minister does not intend this legislation to be destructive, and that he also desires to make it complementary. But if that is the object then I think that the ideal would be only to give these facilities to farmers who sell their produce through a co-operative society, then we shall establish a system which will assist co-operation. Why cannot we do so? Now, however, we are going to give these facilities to persons who are not, and do not want to become members of the co-operative societies. I agree that here, also, better facilities are being given to co-operative societies, but the measures could have been used as a means of strengthening the co-operative societies to a considerable extent, by providing that the facilities would only be granted to farmers who sell their produce through the co-operative societies. It is here provided that all persons can get the warehouse receipts. The speculator who possibly, in the past, did not get money to buy up produce can also get it. We are therefore also assisting those people. It is therefore necessary very closely to examine the Bill, and I therefore say that there ought to be farmers on this select committee so that they can see that the co-operative societies are protected as much as possible. Provision is here made for various warehouses. In the first place there are the grain elevators. There can be no objection to this because we practically have this provision in the law already. We can already get elevator receipts to-day. Now I only want to ask if this is not a cause of its being so difficult to-day to get the maize farmers into the co-operative societies? As I said, we must prevent any injury to the co-operative movement. In respect of the elevators, the principle is already in existence, and I find no fault with it. I therefore have no objection to sub-clause 1 (a). As for the cold storage, practically the same thing applies. As we have had the Act in relation to the fruit exchange which also imposes fairly drastic conditions, I have no objection to it; in the absence of that Act this Bill might possibly be injurious to the cold storage. In sub-clause 1 (c) a harbour system is spoken of which will get these services by co-operative warehouses. In this connection, I am quite in agreement. When, however, we come to sub-clause 1 (b) under which the Minister can by proclamation declare any store as a warehouse to which a licence can be issued, I have an objection; in any case I want to say that we must be particularly careful in that regard. If a Minister were possibly negligent or was forced by circumstances, and, as the hon. member for Standerton were to grant all applications, it might be injurious to co-operators. I do not for a moment doubt that the present Minister, who is able to stand his ground, will allow himself to be forced to do anything injurious to the farmers. He can stand his ground, but we do not know what may yet happen in the future. In the time of depression, such as we are now experiencing, extraordinary pressure may possibly be exercised in future by the farmers, who, in ordinary circumstances, would have no influence, but who in such circumstances, might possibly mislead a Minister of Agriculture to bring certain warehouses under the Act which would never be done under normal circumstances. That might be injurious to the co-operative societies. Let us specially think of wool, skins, ostrich feathers, and mohair. I do not believe that the Minister will declare the stores of brokers in coastal towns as warehouses, but suppose in future a position again arose when the price of wool dropped tremendously, and a great agitation arose amongst the farmers for advances on wool. It is possible that many of them will not have sent their wool to the co-operative societies, but to brokers, and possibly a Minister might be induced to issue licences for warehouses to the detriment of the wool co-operative societies. We must beware against this danger in the select committee and I think the best way will be to grant the power which is proposed to be granted to the Minister with regard to licences to this House so that the House can decide what warehouses shall come under he Act, then existing co-operative societies will not be injured. Another way would be to exclude in clause 29, where agricultural produce is defined, such things as skins, mohair, wool, and ostricht feathers, and possibly to substitute a provision that any further agricultural produce can only be included with the consent of the House. In that way we shall prevent the co-operative movement, which we want to encourage, being injured. We have encouraged it, and must do nothing to do any harm to it. We took good care, e.g., in the Agricultural Credit Act to make no encroachments on the position that was created under the Land Bank Act. This Bill must not destroy the co-operative movement, but advance it, and I think my proposal will contribute to that.

I quite approve of the principle of the Bill. Hon. members talk a lot about the warehouses, but in my district there is, in fact, a lack of warehouses, so that with us no interference can be made on the right of co-operative societies in that respect. Moreover, we have no elevators either. When the idea of elevators arose the commission of enquiry recommended that they ought to be put up in two parts of my constituency, but that has not yet been done.

They can be built by co-operation.

We have large co-operative societies, but they only have warehouses for their own business. If, e.g., there were 200,000 bags of wheat in my constituency, and the farmers wanted to store the wheat, as during this year, because the prices are too low, then private capital would be required to establish the warehouses. When the warehouses have been put up they are possibly not required the next year. If the price is better and I get 23s. to 25s. for a bag of wheat I will sell direct from my farm. My difficulty is that we have not got the warehouses in my constituency, and the Bill does not provide for encouraging the building of warehouses. It will either have to be done by the co-operative societies, or by private people. Hon. members who, like myself, paid a visit to Canada know that in the grain areas of Canada there are about 3,000 to 4,000 elevators. The farmer there is not dependent on warehouses, because one finds the elevator right through the country. We, however, do not have them, and the question is whether a private person, or a co-operative society can build warehouses for the farmers. The merchant in the town possibly has a warehouse, but he uses it for his own purposes. Hon. members must understand that a warehouse costing, say, £2,000 is only a small one.

How can we encourage it?

That is just what I am saying, how are the warehouses to be put up? Will private persons do it if they are not certain that they will pay? If a select committee is appointed they will be able to consider the matter. I do not agree with the hon. member for Albert (Mr. Steytler) that co-operation will be injured by this Bill. The co-operative societies are the very bodies who are in the position of putting up warehouses. In my district there are large and financially strong co-operative societies who can build a warehouse, but I do not know of course whether they will undertake the risk of putting up such a warehouse.

I just want to say a few words in connection with this matter, because I think it is the duty of every member heartily to thank the Minister for this Bill. I am convinced that during all the time I have been in the House this is the best Bill that has ever been proposed on behalf of the farmers. I do not believe that it will injure the co-operative societies, but we know in any case that all the farmers are not members of co-operative societies, and it will be quite a time before they will be so. It is, however, not my duty to say whether the Bill will benefit or injure go-operative societies, but I want to point out that if we had had this Bill in force this year it would have assisted the farmers very much. Take the Free State, where most of the farmers are wool or grain producers; it would have assisted them very much if they could have used the warehouses this Bill proposed to introduce. The hon. member for Albert (Mr. Steytler) has co-operative societies on his brain, but I want to point out that we can assist the farmers in many other ways as well. Here, e.g., we have one such method of assisting the farmers which we must take. As for the objection of the hon. member for Caledon (Mr. Krige) I cannot exactly understand it, but if it is well grounded I hope that he will move the necessary improvement in the committee stage. It is proposed to appoint a select committee on this Bill, but I fear that we shall not then be able to put the Bill through this year. Why cannot the necessary alterations be made in committee? I hope the Minister will not agree to a select committee, because it is of the utmost importance to the country for this Bill to be passed this session. There are the maize farmers, e.g., who have to get their produce on the market, and who can still benefit by this measure if it is passed quickly. I hope, therefore, that the House will not insist on a select committee.

I am in favour of the principle of the Bill, which is a step in the right direction, and will clarify the position in which the farmer finds himself when he has produce for sale; the measure will also facilitate the handling of that produce. At present a large number of warehouses hold produce for farmers, but they experience difficulties in financing the transaction; if the Bill goes through, however, it will be the business of the lending houses to make advances on the strength of the produce in the registered warehouses. I cannot agree altogether with the hon. member for Albert (Mr. Steytler) so far as co-operation is concerned. I have been a co-operator for a good many years, but I am not a co-operator gone mad. He need not have any qualms of conscience as the Bill will assist co-operation, the measure having been introduced in the interests of the producer. As the right hon. member for Standerton (Gen. Smuts) has pointed out, there will be a difficulty in discriminating in regard to the licensing of warehouses, as the Minister will be inundated with applications. May I suggest that one condition which will indicate whether the warehouse is suitable is whether the owner has taken adequate steps to insure the produce in his store from fire and other risks. There has been a good deal of slackness in farmers’ business methods in the past, but the Bill will make them carry on their business operations on a much more satisfactory basis than has been the case in the past. Sometimes a farmer has to wait a whole year before he can turn his produce into cash, and during that waiting process the farmer feels that there are far more than 365 days in a year. When pressed for cash the farmer frequently has to dispose of his produce at a loss. I do not say that some of the wording of the various clauses might not be altered, but I do hope that the wording will be definite and not be smothered up with any technicalities that bamboozle the ordinary man. I came across an instance of that in Oudtshoorn, where a man had a nice will drawn up, and everything was straightforward. He wanted to add something afterwards, and at the end put in “I am leaving the ground on the right bank to one son and the ground on the left bank to the other son.” And then he added “By the blessing of God and plenty of water all my grandchildren should make a good living.” This ended in endless lawsuits, and when I was there in 1900, the one man had gone insolvent and the other had gone to the Free State and hanged himself on a peach tree. I hope the Minister will see that there are not too many window-dressings in the Bill, and that he will be able to carry it through on the lines indicated here.

With reference to the remarks of the hon. member for Caledon (Mr. Krige.) complaining that there were no elevators or warehouses in Caledon, I want to point out that some hon. members are apparently misunderstanding the Bill. They are under the impression that the Government is introducing this Bill with the object of building warehouses. That is not the case. The object is to create securities for farming produce, and the question of the warehouses is a matter for the local people themselves. I understand the Bill in this way; that if there are grain elevators, cold storage, or co-operative societies, the Minister cannot allow any other warehouses. He will grant no other licences, because there is no necessity for them. If, however, there is a co-operative society in maize districts which society refuses to handle wool, then I take it the Minister will probably be prepared to grant a warehouse for the treatment of wool. Anyone who has ever had anything to do with co-operative warehouses, will state that it pays to have a warehouse, provided it is done on a co-operative basis. No one will establish a warehouse to store the goods of the people at a few pence a bag. The only way to get warehouses in a district, even in Caledon, is to establish co-operative societies, to build warehouses, and then to apply to the Government for a licence. It we bear that point well in mind we also understand that it is not necessary to have the fears that were expressed by the hon. member for Oudsthoorn (Mr. le Roux) to the effect that the building of warehouses would encroach on the rights of co-operative societies. It is clear that the fourth provision of clause I with regard to warehouses will never operate in places where there are co-operatives societies, so that there can be no question of encroaching on them Where there are no such societies, or elevators, the districts must, however, not expect the Government to build warehouses. They must do that themselves, and they were to come to the Land Bank for advances on such produce, they would have to give the same security which they now have to give to co-operative societies. In other words, the security of farmers as is the case with co-operative societies. The effect of the Bill will therefore be that no warehouse can exist unless it is on a co-operative basis.

What about the wool warehouses of the brokers in coastal towns?

No co-operative society at the coast will be injured because they do not exist there.

What about the F.C.U. and the Boersamwerk?

They get a licence, although they are really not a co-operative society. The question would be whether that is enough security. If that exists there is no reason for refusing a licence. I feel convinced that as far as the maize farmers are concerned, there is, in any case, no danger of their being damaged, and in the case of the wool farmer it can also be very easily arranged by strong control over the issue of licences.

I am very glad that the Bill is welcomed by both sides. I do not always have that good fortune, especially in connection with drastic measures which are required to fight stock diseases, etc. The hon. member for Standerton (Gen. Smuts) said that we must be very careful about warehouses, e.g., in his district. I can assure him that we will go thoroughly into the matter. The hon. members for Albert (Mr. Steytler) and Oudtshoorn (Mr. le Roux) are afraid that this Bill will damage the co-operative societies. The experts, Dr. Kemmerer and Dr. Vissering, pointed out that exactly the reverse would be the case, and quoted the examples of other countries. The hon. member for Albert said that we ought rather to have a farmers’ bank. The Minister of Finance has already warned us this afternoon to be careful about banks. I do not know how the hon. member wants the hank to be established, but when the time is ripe for it, I shall be ready to consider it. Hon. members need not be afraid of too many licences being issued for warehouses. The hon. member for Caledon (Mr. Krige) said that he had no warehouses.

Nor a grain elevator.

Yes, not even a grain elevator. But he has such a good co-operative society, and I hope it will put up a warehouse.

You promised us a grain elevator a long time ago, but we have never yet got it.

I do not think it is necessary for me to say any more on the matter. I move the second reading.

Motion put and agreed to.

Bill read a second time and referred to a select committee for consideration and report and that it be an instruction to the committee to bring up its report not later than Thursday, 22nd May.