The effect of this amendment is specifically to empower local authorities to establish and conduct markets in native locations and villages. Now, we on these benches, of course, have no objection to that. The Minister, however, in explaining the purpose of this amendment, said that the intention was that in these markets when established, or if established, local authorities themselves should indulge in municipal trading. Now I have considered the Minister’s statement which he made at an earlier stage of this Bill, and I owe it to those I represent to ask for certain assurances in this connection. The local authorities in terms of the existing law have very wide powers to engage upon trading enterprises in municipal locations, and to an increasing extent they have been exercising those powers. When the Urban Areas Act was passed—the Minister will correct me if am wrong—the trading clauses were justified on the ground that native traders would be allowed to trade in their own locations. On the Minister’s statement, this clause would involve either municipal competition, in these markets or municipal monopolies in relation to certain kinds of goods sold to the natives. The Minister said that the purpose was to sell at cost, or at as near cost as possible, products of nutritive value in the native locations. Now the first assurance which I would be obliged if the Minister would give me is that if that is done, it will be on a competitive basis and not on a basis of municipal monopoly. I am anxious in discussing this matter to guard myself against any possible misunderstanding. So long as wages remain at their present low levels, I am in favour, as I have repeatedly said, of specially cheap goods being sold to the low income groups under subsidy. That is what the Social Welfare Department is doing at present. I was one of those particularly who on many occasions protested against large quantities of citrus fruit, suitable for distribution not only among the natives but also among the poorer classes generally, being destroyed. I don’t think therefore that I can be accused of putting vested interests before the general public interest. But on the Minister’s statement I did not understand that the purpose of this clause was to subsidise food and sell it at sub-economic prices. The ordinary method of distribution in such cases would not be through markets where anyone can buy but through depots where people below a certain income group can be served. I am all in favour of such commodities as milk and vegetables being sold to low income groups at sub-economic prices under Government subsidy. Of course, my contention is that the ultimate cure is to raise wages. What, however, is proposed here is that municipalities should embark, or rather municipalities should have their present facilities extended for embarking on trading ventures in competition with, or to the exclusion of, the ordinary trading channels. Now, I am far from being opposed to public enterprise on its own account in all cases, but I do say this, that this whole question, the question of the distributive trade in all its various phases, is at present under consideration by the Distributive Costs Commission of which the hon. member for Parktown (Mr. Stratford) is the Chairman. I understood from the Minister’s statement that distribution of these commodities under this clause, to the exclusion of native traders, would be bound to make commodities cheaper even without a subsidy in the locations—it would make it cheaper than it would be if the traders undertook it. Now, that, I understood, is the very subject which is being considered at present by the Distributive Costs Commission and as far as I know there is nothing in the terms of reference of that Commission to exclude enquiries into the distributive costs in native villages any more than there is in relation to European townships. I think the implication of the Minister’s statement was that the ordinary native trader is charging unjustifiable prices. Now I ask what evidence there is of that. That seems to me a matter which should be considered by the Distributive Costs Commission because if there had been a proposal requiring local authorities to embark generally on trading ventures in competition with private enterprise, there would have been, I feel, a considerable amount of opposition in this House. We see the opposition which the Fishing Bill has produced. When however it is a matter which concerns only native distributors, not a word so far has been said. Now I want to repeat: if it is alleged that native traders are making profits to an unjustifiable extent, we should know on what grounds that statement is based. If there is a suggestion of that, then it should be investigated by the Distributive Costs Commission. I want to emphasise in this connection that the opportunities for employment in types of occupation other than unskilled labour are very limited indeed among the native population. Trading in their own locations—even that right has in many parts of the Union been denied to them, and there is a tendency, which the native people are worried about, for those opportunities to be restricted still further by the incursion of municipal enterprise. On the face of it it would seem that there is less justification for an allegation of profiteering in this particular field than in the general distributive field, and I say so for this reason. Allegations about profiteering are bound up with allegations about the existence of monopolies particularly in the wholesale field. Now in every location that I know of, all trade by native traders is highly competitive. If there is anything in the fundamental assumption on which our system is based that the ordinary laws of supply and demand ensure the distribution of commodities at as low a price as possible, that would be true in the field to which I am referring. The native middle class, or educated class, is a very small one indeed. It is one whose opportunities have been continually subjected to restrictions. Now I am going to assume for a moment that public enterprise can distribute these types of products to which the Minister refers more cheaply than private enterprise can. I want to make this first observation, that if the Distributive Costs Commission finds that that assumption is correct, it should be applied to the whole field, and that the Government will have to say, “No more private trading in South Africa.” I have very grave doubts that the Government will say that. But assuming that the basis of the Commission’s finding is that public enterprise must be cheaper than private enterprise, then I do hope that the Government will abolish all private trading. I want to emphasise this, assuming that public enterprise can distribute these commodities more cheaply in locations than can private enterprise. Let us assume that. Then what is the remedy? The Minister said that the purpose of this clause was to distribute these commodities at cost or as near cost as possible. Now what does he mean by “cost”? What are the elements which enter into cost? Cost covers a whole range of expenses, from the raw material stage to the retailing stage. Now what cost does he mean to eliminate? Does he mean to eliminate the profit of the wholesaler? Are the costs of the wholesaler to be excluded? Is the wholesaler’s profit to be included in cost? If the local authority decides to distribute coal at cost—at what cost? The Cape Town Municipality has a proposition to do that at Langa. Does it mean that the wholesaler’s profit is to be eliminated, or, in this instance, does it only mean that the comparatively small profit of the native trader is to be eliminated? I am going to suggest this: Assuming that private enterprise does tend to increase cost, there is a way of assisting the public in the locations without necessarily excluding or unduly competing with the traders who are there already. Let the Municipality act as the wholesaler, and let it use the ordinary distributive channels to distribute these commodities at a lower price. That has been the principle which has been applied in the operation of the Marketing Act. However much control there has been, the ordinary trade channels have been used. If the wholesaler’s profits were eliminated and the retailer’s prices were controlled under the ordinary price control regulations, that would afford ample opportunity to prevent profiteering, and it would appear to me that it would be possible to distribute at considerably lower prices than at present, and at lower prices than those that would be made possible by the elimination of these slender profits of the native retailers at present. I say that the retailers’ profits are slender compared with those of the wholesalers. So the issue is not whether public interest should take precedence. The issue is here as to whether these articles are being distributed at the cost of the European wholesaler in the native village or at the cost of the native retailer. That is the real issue which is raised. If it is a question of subsidisation of commodities of nutritive value to be sold below cost, then that is not something which enters into considerations relating to the ordinary distributive channels, and I am fully in favour of that. What I say is that the native trader has very limited opportunities. I believe that to a large extent native traders are exploited by the wholesalers. I am not going to make a general accusation because I cannot prove it. But in many cases I believe it does happen—it is the high wholesale charges and the interest charges for credit, which has to be given to the native trader, which tends to keep up prices in the native locations. Now these native traders are not rich men. They struggle along under highly competitive conditions. I think much more could be saved by the municipalities paying attention to the wholesalers and eliminating the profits of the wholesalers rather than the retailers. I hope the Minister will give us the assurance that it is not intended to eliminate the retailer, and secondly that his Department—I am making a definite suggestion now— should see to it first of all that where the municipality trades it does not do so by excluding the ordinary trader, and secondly that his Department will give serious consideration to the question whether steps should not be taken for it to engage in the wholesale business, to protect the existing native trader against any exploitation which he may now suffer at the bands of the wholesaler.

I do not think it is necessary for me to reply to all the detailed questions put to me by the hon. member, because really I think they should have been addressed to the Minister of Commerce and Industries as they go fully into the question of wholesale and retail profits. I just want to say this that under the Act as it stands today, that is under Section 22 (c) (ii), the Minister has power to authorise urban local authorities to carry on business as general dealers, butchers, bakers and eating-house keepers. That is an authority which I have, and the inclusion of markets is merely an extension of the principle which already exists.

That is what I said.

The municipalities which apply for these facilities will be required to grant to the natives the right to carry on business on the same market, on any market. There’ll be no question of a monopoly. That is the main point which the hon. member raised. And that is done already in places like Pietermaritzburg and Durban where a very useful business is done. So the whole question of comparative costs, retail profits and wholesale profits does not really arise and I’m afraid I cannot go into it here. Personally, my own view is that the middleman, so long as he doesn’t try to make excessive profits, is still a consumer. He also is a man who gives employment and I do not want to exclude anyone who does a justifiable business. But here, where you have the case of a municipality proposing to supply essential foodstuffs and essential requirements such as I have mentioned— milk and bread and coal—if it is possible to give those essential commodities to the people cheaper than anyone else can do, then surely there can be no objection to that. The hon. member has told us very frankly that he is not opposed to hat, because after all is said and done, private enterprise cannot stand in the way of anything of that kind. But there is no question of giving a monopoly to a municipality because I am most anxious that the native should be allowed to do business in his own area. He must be allowed to build up a class of business in his own area which will not only give employment to others there, but which will give him a standing, a prestige, a feeling that he is running bis own show among his own people. And I do not want to take any steps to interfere in that respect. I do not want to see any monopoly created to squeeze him out. I am glad the hon. member has raised the point. I am glad to see that he dissociates himself from other people—I am not suggesting anyone in this House or the Other Place, but I am referring to speeches which I have seen reported and in which it is suggested that municipalities should be prevented from distributing food at a cost as low as possible because it will interfere with private interests. I am glad the hon. member put it so strongly, because such a proposal was very strongly opposed by two people at a meeting in a certain location, and I am glad to see that he dissociates himself from that campaign against this measure.

I don’t know what you are referring to.

Well, it was in all the newspapers.

I haven’t seen it.

I just want once more to emphasise that this is not a question of monopoly at all.

Amendment put and agreed to.

Amendments in Clause 14, the new Clause 17, the omission of Clause 21 and the new Clauses 22 and 24 put and agreed to, and the Bill, as amended, adopted.

Bill to be read a third time on 4th May.

In the statement which the Minister made in relation to the Motion which he has moved, he contended that the land to which it is proposed to move these people is not only larger in extent, but I understood him to say of greater value, than that which they now occupy. The hon. member for Transkei (Mr. Hemming), in the statement which he made yesterday on this motion, as a result of his cross-examination of the Chief Agricultural Officer of the Transkei, appeared to have some doubts on that matter. Now that is a matter on which there is some conflict of evidence in this House, but it is not in my submission the relevant issue in relation to this case. The relevant issue, or issues are these, whether in effect these people were promised that if they as a whole unanimously were opposed to removal, they would not be removed. And secondly, as to whether assuming that promise was given, that promise is to be honoured. That seems to me the simple issue. Now in regard to the position as it is today—the authorities 60 or 70 years ago gave these lands to this tribe for services rendered—services of a military character. Obviously when lands are granted, they are granted in perpetuity, unless there is some qualification in the terms of the grant. But the matter did not end there, because General Hertzog, when he was Prime Minister and Minister of Native Affairs, personally dealt with this matter. He heard representations from certain landed interests in 1925 in East Griqualand on the occasion of a personal visit he made there, and he considered the question of purchasing other land for these people. The people themselves were then consulted; they would not agree, and they were given the assurance through the Chief Magistrate—the proper official channel— that if they were opposed to being moved, they would not be moved. Now that is the evidence which is to be found in the memorandum which the Government itself presented to the Select Committee. And therefore we are left with one issue, as to whether or not that assurance is to be maintained; as to whether the Government still stands by that assurance. Now I think it is a principle which should not be denied by anyone that a promise and assurance by one Government binds the next Government. If the Minister denies that, I shall be very surprised indeed. Under the Party system you have changes in Government, but there is continuity in administration. The personnel of the Department remains the same, whatever Government is in power, and this was an assurance given on the instructions of the late General Hertzog. And I am quite certain from what I knew of the late General Hertzog—and I was in this House with him for several years and thought highly of him, although I didn’t agree with his policy—he would have been the first to be perturbed if he felt that any assurance he had given was not being adhered to. The Minister said, however, yesterday that these people in the location had offered, had agreed to be removed to certain other land adjoining the land where they are at present. I have to meet that statement as a basis for the suggestion that the principle of removal had been agreed to by the people, and that therefore the issue was not as to whether or not the assurance should be adhered to that they would be allowed to remain on the land where they were. I must, express some measure of surprise at such an argument being used. I know how strongly people of this kind are opposed in general to being removed from a place they know to another place …

They know the other place too.

… More particularly when their title has been founded on historical circumstances which they value. That offer to move to adjoining land was made—there can be no doubt about it, and if I am wrong the Minister will be able to contradict it directly—that offer to move to adjoining land was made under the fear of being removed to the place to which they are now to be moved. It was not an offer in the sense that they wanted to go, it was the result of pressure due to outside influences. Generally speaking the objection of the African people to removals of any kind is a familiar one. It is one, I believe, born from a sense of insecurity which they feel as the result of several generations of experience, and I doubt if there is anyone, having regard to the troubled history of this country, who will say that they had no grounds for this feeling of insecurity. And that feeling is reinforced by the natural, the conservative, instincts of a peasant— of a pastoral people— for the land they have occupied and their fathers have occupied before them. We have many members in this House representing rural constituencies, and they will know the feeling of the country people for the surroundings with which they are familiar and the lands which they and their fathers occupy and have occupied. It was because of all these circumstances that we on these benches back in 1939 opposed the amendment to the Land Act empowering the excision of scheduled native areas, areas which had been scheduled in General Botha’s days for the permanent occupation of native people, because we were afraid that these kinds of circumstances might arise. The law was changed, the modification being made in the Senate that a resolution of this House was required to excise a portion of the scheduled native areas. In its original form the Bill simply gave administrative power to the Government for the excision of scheduled native areas. As a concession the Government accepted an amendment that a resolution of this House should be necessary. The point I want to make in connection with this matter is that the native people were no party to that amendment. Their representatives opposed the amendment of the Native Land Act, and in any event a change of the law of that character cannot in my submission supersede assurances that have previously been given to individual people and to individual tribes. It was not clear from the statement that the Minister made yesterday as to the reason for this removal. The hon. member for Transkei (Mr. Hemming) who represents this area made the statement that it was due to pressure from local landed interests outside the location. I did not understand the Minister’s reply to deny that. So what it comes to is this, that the people who have been there for 60 or 70 years, who are not voters, who want to stay where they are, or if they must move, move only to a place close by, and the pressure of enfranchised people who live alongside; and it is between those two sets of interests that he government had to chose. The late General Hertzog made one choice; this Government apparently is making the opposite choice. The Minister referred to the fact that there was no room for development, that there was no room for expansion where these people are at present. I do not know whether by that he meant that it was simply and solely in the interests of the people that this removal is being suggested. If so, why were they left there all these 60 years? Ánd in any event I am not clear as to what is meant by the statement that there is no room for expansion. Legally that statement has no significance. Because as the Minister is aware, in terms of the 1936 Native Land Act, land even outside the scheduled native area can be bought up by the Native Trust if it is bought contiguous to an existing native location. As a matter of fect, on the question as to whether it is simply on the merits of the case that the decision is being made, or whether it is as the result of pressure from the enfranchised interests, I see from the memorandum that the Government presented to the Select Committee the following statement—

and that would seem to be a clear indication that it is not on the merits of the case that this decision is being made, but because of political pressure. I wonder, and I cannot help wondering, why it is only now after the lapse of over half a century of occupation by these people of their land that this decision has been arrived at. Up to 1936 such of these people as were qualified did have a vote. The area at that time was represented by Mr. Gilson. I remember the speeches Mr. Gilson used to make in this House up to 1936. They were speeches which were much the same as the speeches which are made from these benches. I also remember that after 1936, after the passing of the Native Representation Act, Mr. Gilson started straight away on this thing. I can remember speeches that he made in this House. I was not here myself, but I heard him asking for the removal of these people. We have this situation that from 1870 onwards up to 1936 the native people had a vote and they remained where they were. As soon as that vote was taken away—I can remember quite clearly—I am talking of my personal recollection—Mr. Gilson started on this and apparently his efforts continued and his voice became shriller as a general election approached. I remember once hearing a judge state from the bench of the Supreme Court—and he was thinking of course chiefly of the more backward native people, as I should think most of these are— that in dealing with the native people it is important that there should not only be justice but that there should be an appearance of justice. If there is one sound principle of administration it is this, that the authorities’ word should never be given where there is any possibility of a departure from it at a later stage. In saying that the authorities’ word has been given, I am simply quoting from the information placed by the Department before the Conferring Committee. I have often heard native people suggest that the promises, the pledged word, of the authorities have been broken. Whenever that suggestion is made, it is hotly denied by the authorities in this country. Whatever the other merits of this case may be, this seems to be clear: it seems to me that here there was a departure from the pledged word given by the late General Hertzog through the Chief Magistrate of the Transkeian Territories. However, the hon. member for Transkei stated yesterday that as a representative of the area where these people live, he has to do what he can for them in the predicament in which they are placed, and against the background and the circumstances that I have outlined, I think he has made cut a case at the very least for this matter to be postponed for a year in an attempt to get an agreement. I feel that if it is in the interests of these people to be removed from where they are at present, they can probably be brought to agree. It may be quicker for this House to take this resolution and to push them off; but if it is really in their interests, I feel that they can be brought to agree, and in any case, in view of the past history of this matter, it is particularly worth while to make a further attempt either to get the people to agree to removal to where it is suggested they should remove to—the Minister states it is a better proposition than where they are new—or else to try and get the interests that have pressed for this to give up something on their side. That is a proposition by way of compromise which these people themselves make. They say: “We do not want to move, but if you are determined to move us, move us to a spot indicated by us.” No, these interests wanted the whole thing; they were not prepared to come to any arrangement. I want to urge upon the Minister at least to accept this suggestion to postpone the matter for a year and to try to get a settlement of the matter between the two parties concerned. Do not just because the one side is powerful and the other side is weak overpower the later. And that is the suggestion in the motion I have moved.

I can assure my hon. friend who has just sat down that everyone who has had anything to do with this matter, has the greatest sympathy with those people. It is a natural feeling on the part of such people that they want to retain their old homes. But I want to remind the hon. member that the white people also have the same sentiments. Quite a number of Europeans have had to leave their land. They have been removed from their lands because their lands constituted white spots in black areas.

There has been no expropriation.

They have had to make way because they were surrounded by natives. It was not a matter of expropriation as such, but those people were compelled to give way. I am not opposed to that. That was the policy decided on by the people of this country some years ago and I think it is the right policy. I want to say this—when those areas were examined by us, when we examined both the location and the land which is now to be given to Makoba’s people in exchange, I felt convinced that those people were getting something very much better than they had ever had before. I go further, and I say that if I were given the choice to select 4,000 morgen of the land which they are now being given in exchange, or the 4,000 morgen in the present Makoba location, I would choose the new land. I would have no hesitation. I agree with Mr. Thompson, who drafted the report, that there are certain lands in Makoba’s location which are very valuable. But these valuable lands are small bits along the river which it is very difficult to cultivate and to control. The natives allow their cattle to roam about and to graze everywhere on the lands, and in those circumstances it is very difficult to exercise any control. These bits of land along the river are not big. There is also valuable land on the other farms which they are to get now. The fact that 100 morgen can be irrigated on the new land, is of very much more importance, to my mind, than the fact that there are some small bits of valuable land in Makoba’s location. I only want to add this that in the proposed exchange, account has very definitely been taken of the fact that that land was given to Makoba’s people for certain services they had rendered in the past. I would certainly never have agreed to giving them 10,000 morgen in exchange for 4,000 morgen if it had not been for that fact. But in view of these historic associations and also in view of the fact that General Hertzog made them certain promises, I agreed to give them a little more than would ordinarily have been done—mainly on account of the promises which had been made to them. I agree that we should not make any promises to the natives especially which we may not be able to give effect to in the near future. The native does not understand anything like that. That is why we are giving these people 10,000 morgen now instead of 4,000. The hon. member now wants to create the impression that there is something wrong, because we are not prepared to give those people another home just across the river. Well, all of us are very anxious for the natives to live in peace and harmony with the Europeans. If we tranfer them to this new place, it will be possible to have peace and harmony, but I am afraid it will not be possible otherwise.

But they have lived there in peace for the past sixty years.

There is no peace today, and if we exchange their land and let them go just across the river in conflict with public opinion there will be a great deal less peace. If we only move these people across the river there will be more trouble. I agree with the Minister of Native Affairs that this matter of changing their homes is not the main consideration so far as they are concerned. They have expressed their willingness before today to leave their present land and to move somewhere else, if there was land available for them. If they can go one mile away from their present homes, surely they can just as well go six miles away. This matter has been going on for years. How many years has not this whole question been under consideration and how many reports have there not been drafted in connection with it? Surely we should at last put an end to it. I am quite willing to agree that wherever there are white spots in native areas, those people should also be made to leave and be given other land. That is the correct policy to pursue and we must be just. I feel therefore that it would be a mistake to put this matter off any longer. The land which it is proposed to give Makoba’s people is only six miles away, just across the river, from the land which they want to go to. If they are prepared to go away one mile from their present land then I fail to see why they should not go six miles further. I also want to point out that we examined the crops in Makoba’s present location as well as on the proposed new lands. There are a lot of lands which can be cultivated in the new area and the mealies we saw there were better, or at least just as good as the mealies we saw in Makoba’s location, even though it was not on the best of the new lands that we saw the mealies. They can produce mealies there, they can produce mealies just as well on most of these new lands to be allocated to them—if not better than on their present lands. The hon. member also mentioned the difficulty in connection with the valuation of the land. He said that Makoba’s location had been tramped out and over-grazed, and all those things, and that in the circumstances it appeared strange that the land in the present location was valued at the same figure as the new land to which these people are going. I want to point out that the land in those areas recovers very much more easily than in other parts of the country and that possibly is the reason why so little has been taken off the value for deterioration of the soil. But the hon. member should remember that they are getting 10,000 morgen instead of 4,000 morgen. The bargain is such a good one that if I had anything to do with it I would not hestitate for one moment about accepting it. I was told at the meeting which we had with the natives that the same people are always giving identically the same evidence. Nothing new is ever produced, and the peculiar thing is that it is always the same natives who are giving evidence. The view is held in those areas that the people who invariably come forward to give evidence are not the ones who really should come forward and that other interests are involved in the whole matter. I am convinced that if the representatives of the natives are really in earnest in regard to this matter ….

Have you any doubts about it?

I have no doubts at all. I say that if they are in earnest in their attitude towards the natives and if they are really familiar with all the circumstances they will not hesitate for a moment in giving their support to this proposal, and I say so for this reason—that the very poorest of the natives in Makoba’s location will have a chance of making good on these new lands. There are a number of natives who only have a little bit of land to plough, whereas others again have a lot of land. Some natives have two head of cattle whereas others have as many as ten. I make bold to say that they have arranged these things among themselves—this of course is not official—and that they have arranged things in such a way that some of the natives are not to have more land or more cattle. When they get to these new lands there will be a chance for the poorer natives to rehabilitate themselves, there will be a chance for them to expand and to develop, and to get justice. We must try and induce these people to go there peacefully, and hon. members opposite should assist us in trying to bring this about. The least we could have expected from the native representatives was that they should have used their influence with the natives, and they have a lot of influence, to induce them to go peacefully to these new lands. The more peacefully they go there and settle down, the more we shall be able to do for them. I trust hon. members will assist us in regard to this whole matter.

I feel that it is necessary to express one particular point of view that has not been made clear in this House, and that is the fact that when this Act was passed in 1936 certain areas were set aside as areas in which native development could take place, and certain areas were set aside as European areas in which the European people would be allowed to continue to develop their farms and to develop their industry, that point was made very clear in the Act. In order to bring about this state of affairs, the Act made provision that certain black spots in European areas would be cleared out and also that certain white spots in native areas would be eliminated. Those were two of the main principles of that Act. Since the Act was passed in 1936, as far as I know, no single black spot has been done away with. If any black spot has been cleared up, we have not been informed of it. This, I understand, is the first case of its kind. In 1936 Parliament felt that it had to be particularly generous to the native people. It gave them a very much greater safeguard than it gave the Europeans. It gave the natives this safeguard that they could not be removed against their wishes without a resolution passed in both Houses of Parliament. That is why this matter is before Parliament today. My constituency contains a large number of natives and a considerable number of Europeans; the areas are very much mixed up. As a result of the 1936 Act and the energetic efforts of the Native Affairs Department in endeavouring to get hold of as much ground as possible for native expansion, 63 European farmers were dispossessed of their farms. Those farms were bought from Europeans; they were paid quite a good price, but those people did not wish to go voluntarily. They simply realised that their tenure of those farms was no longer safe and they felt so worried that they said that rather than have this thing hanging over their heads continually they were prepared to sell. They were therefore removed, and yet no one has made any reference to the fact that they were removed. That created a feeling in the district that the rest of the European community was no longer safe; and I noticed that the hon. member for Cape Western (Mr. Molteno) suggested that Makoba’s location should stay and that if expansion was needed that expansion could take place at the expense of the surrounding farmers in that area. If that policy is adopted, every European area in that constituency will be menaced either immediately or at some future date. That is one of the reasons why Mr. Gilson felt that this position should be cleared up, that these small isolated black spots should be taken away from where they are at present and placed alongside other native areas. This question was raised on many occasions, but on every occasion various reasons were brought forward to prevent anything being done. It was raised by the Beaumont Commission. They recommended that it was desirable to remove the native location from the middle of the European area. That commission was followed by the Scully Commission which made the same recommendation. Then in 1925 and 1926 the matter was again considered and it was felt desirable from every point of view that these recommendations should be given effect to but the matter was again shelved. This question has now come up and there is a very strong feeling that it should be settled. Very strong representations were made to me before I came to Parliament that I should take up this matter very energetically and see that a decision was arrived at. When I came here I made it very plain to the Native Affairs Department that I was not prepared to agree to any removal of Makoba’s location that would inflict any injustice on the natives in that location. I felt that the pledges which had been given to the natives should be generously interpreted, that they required exceptionally generous treatment, and I was not prepared to agree to any solution that did not make provision for generous treatment of the natives. I know this area very well. I have passed through it hundreds of times. I can assure the House that it is in an appalling state. It is one of the worst eroded pieces of land that I know of, and it is absolutely essential that it should be tackled. It was rather suggested that the European farmers who previously owned the farms to which Makoba’s location are to go wanted to sell because they could not farm there successfully, because the land was bad. It is true that one or two of the mountain farms are not so good, but the statement that this land is being sold by the Europeans because they could not farm there successfully is absolutely incorrect. I need only instance the late Mr. Walter Leslie, a stud merino sheep farmer who did exceptionally well. He farmed very well, and it was only because he realised that there was no future to these farms in the middle of a native area, that he was willing to sell. I know these farms quite well and as the hon. member for Potchefstroom (Mr. Van der Merwe) has pointed out, there is a considerable area of good ground that can be irrigated. There are no irrigable lands at Makoba’s location. I admit that there are small areas which are very fertile, but most of the land in Makoba’s location is absolutely exhausted; it is ruined because of over-ploughing and over-grazing. The 1936 Act, in order to safeguard the native people, provided that land of equal pastoral and agricultural value must be provided to the natives. That has been done. Much more than that has been done. Land of double the pastoral and agricultural value has been provided. In addition to that the Native Affairs Department has agreed to pay all the costs of transfer; all the expense of removal; they have agreed to provide transport, to help in the building of huts and in every possible way they have carried out their obligations and very much more than their obligations. There is no reason for anyone to say that these natives are not getting an exceptionally generous deal. If the representatives of these natives had visited the area and discussed this matter with the European farmers in that area—and I submit that the European farmers have done a lot for the natives; they have the interests of the natives at heart; they are not out to exploit them—they would have realised that this is going to be to the advantage of both the Europeans and the natives. If the natives are to be allowed to remain where they are, absolutely overcrowded, they have no hope of expansion. There is no prospect for them other than the prospect of starvation. Many of these people are not Makoba’s people at all. Natives have crowded in from all over the place, because it was possible to obtain a piece of land without restrictions and that is one of the reasons why the place is overcrowded to such an extent.

What is your objection to the amendment?

My objection to the amendment is that if you are going to go on pandering continually to the natives and saying to them “if you continue to fight you will get another farm …”

That is not in the amendment.

My objection to the amendment is this that other ground is clearly indicated in the 1936 Act as a European area and it is not going to help to take a black spot in one European area and to put it just across the river in another European area.

Are you not in the Transkeian area?

Of course we are in the Transkeian Territorities. But the hon. member wants to suggest that because there are European districts in the Transkei, the whole area is a native area. The whole of the Mount Currie district is clearly laid down as a European area. A considerable portion of the Matatiele district is also laid down as a European area. If these people in the European areas are to be continually menaced by statements such as that made by the hon. member for Cape Western (Mr. Molteno) that if expansion for natives is necessary it can always be met by taking in an additional farm, there can be no security. There is one point which I want to correct. The hon. member for Transkei (Mr. Hemming) said yesterday that the acquisition of the farms which the natives want across the Umzimvubu River was not opposed by the European farmers. Let me say this, I was asked by the people themselves to make the strongest representations, to make the strongest protests against more ground in the European area being acquired. The Mayor of Matatiele was the man who was instrumental in putting up a strong memorandum. This was supported by the farmers’ associations. In those days I was a member of the Provincial Council. Mr. Gilson and myself made joint representations in Cape Town and we got the assurance that the matter would be settled in a satisfactory and fair manner without having to take any of the land which was set aside as European area. I just want to give the House the assurance that this deal which the natives are getting is more than a square deal. They are given land two and a half times as large as what they have at present and much more valuable. I feel in view of all these facts the House can accept the assurance of the Select Committee, which has investigated the matter and of the Native Commissioners who have visited the spot, that these people are getting a square deal.

I must emphasise ….

I am sorry the hon. member has lost her opportunity of addressing the House now by seconding the amendment of the hon. member for Cape Western.

I thought I could reserve my speech.

No. A member who moves or seconds an amendment cannot reserve his speech.

I am not going to detain the House very long.

Does the Hon. the Minister wish to speak to the amendment or to reply to the debate?

I wish to reply to the debate. There is only one point I want to make very clearly and that is this: A great deal has been said about the breaking of promises made to the natives. I think hon. members over there made their remarks in perfectly good faith. But if the hon. member for Transkei (Mr. Hemming) will read the memorandum a little more carefully he will see that it can be taken in another way too. When this matter was raised with me, the first question I put was this: “Was a promise made?” and even on the files that is recorded, because had a promise been made, I should have wanted to consider the matter very carefully, and the Chief Magistrate of that day, was asked, and I found that what had transpired was this. The Head of the Department at that time wrote to the Chief Magistrate and said that if the people were unanimously against it the Government would not force it upon them. In other words he was told, that if those people as a whole were against the move we would leave it. But that was never conveyed to the natives—it was not a promise to the natives. That I have from the then Chief Magistrate. It was merely conveyed to him, “If they are against it, well let it remain as it is”. The Chief Magistrate did not on behalf of the Government tell the natives that a promise had been made.

The hon. member can read the memorandum. It says this:

The Department informed the Chief Magistrate that if the natives were unanimously against removal the Government would not enforce it upon them.

Now I realise that hon. members opposite are fighting on a principle and I respect them for it. I quite understand their point, but I do ask them this: Do they not in their heart of hearts think that this is not only a square deal but very much more than a square deal.

No, we don’t agree that it is a square deal.

Oh, very well then, I am dealing with the actual position. I think hon. members do agree in their heart of hearts that we are not only giving the natives a square deal but very much more than that, and if that is so then I ask them what impression would be made on the native mind if they are told that they are being cheated, whereas in actual fact those natives will now be given a chance to go ahead and develop, a chance which they could never have if they were to remain where they are.

That is not the point and you know it.

That is the point. It is so easy to come here and talk about hypothetical cases and about principles, but I want hon. members to realise what they are doing—it is so easy to make these simple people believe that they, hon. members, are exposing the Government and showing them up because they are setting out to cheat the native out of his birthright. And that is what is worrying me because if the natives think that we are cheating them, what is it going to lead to?

The memorandum certainly misled me. Why was this memorandum not made clear?

Oh, come, come, the memorandum makes it quite clear. The Chief Magistrate was informed of the position. But now let me say this. This is not the only reason why they are being moved. We are told that the white farmers made representations. Perfectly true. But that is not the only reason why these people would have been moved. You have a position here of a location completely surrounded by a white farming area. It is quite natural that people would object to that. But that is not all—any effort at expanding that native location in the midst of a white area would have been hotly resisted, as the hon. member for Griqualand East (Mr. Fawcett) told us. No farmer would be prepared to sell any land to the south— any of that land which Makoba’s people wanted. And that is a fact. If you had done that, if you had allowed them to expand there, you would merely have created another black spot in a white area. I did not mislead the House when I said that these people were prepared to move south of the river. I made it clear that they had stated that they were prepared to move south of the river if they had to go. We said : If you are prepared to move south of the river, won’t you go nine miles further and go into a native area? Now to make these people realise that they were not in any way being done down, let me say this: The Government went to the extent of buying over 10,000 morgen in exchange for these 4,000 morgen. No morning papers have printed the actual value of the ground, but I want to put the position clearly so that the public can see exactly what it is. The man who valued that land of Makoba’s Location also valued the other land on a similar basis, and he has no axe to grind, and he knows what he is talking about, having been there for many years. He valued Makoba’s Location at just over £20,000. He valued the other land at £51,500. That is the bare land without the improvements. What the Government has paid is just £400 short of £70,000 for the land which Makoba’s Location is now moving into. The hon. member shakes his head. Let me look at the figures.

They only want to stir up the natives.

To be exact, £69,601 is what the farms cost us; he valued it at £5 per morgen and he valued Makoba’s Location at just over £20,000. I don’t want to go into this at length, but I am anxious that the public should know what the true position is because they are brought under the impression that we are doing something discreditable. The Government paid just short of £70,000 for the new land whereas the present land is valued at £20,000. Now the new land is fenced off and paddocked, it is also capable of irrigation; there is more than double the amount of land available for them as compared with what they now have; we are giving them a year to move in so that they can build their homes there with the assistance of the Government, because we are prepared to supply the material and give them the transport, and I do say that for generations to come they can expand, whereas if they are left where they are now, within a few years we would have to cut down their stock and keep on cutting it down because they could not live there.

Is your Department not able to get them to agree to such a good proposition?

Yes, that is a perfectly fair question. A short while ago, the Railways here offered free meals to the poor— whites, natives and coloureds. The poor white workers accepted with both hands. The coloureds did, but the natives wouldn’t have it. That is the extraordinary psychology and that is the sort of thing you get if people are continually telling the natives that they are being cheated. And that is the sort of thing that goes on. Whatever we try to do, the basest motives are ascribed to us.

Don’t bring these things forward, then it won’t happen.

Oh, then we must never move forward at all. We must just sit here. When you see things going to pieces, just let it go on. Well I have put the position as clearly and as fairly as I can. There is no question of trying to do the natives down. We are giving them more than two and a half times the amount of land they have, land of a similar nature valued at more than three times the valuation of their present land. I hope that the natives themselves and the people outside will appreciate what the position is, and that no wrong impressions as to the Government intentions will in future be created, and that the natives will not always be told that the Government is trying to cheat them. Nothing of the kind.

Question put: That all the words after “That”, proposed to be omitted, stand part of the motion, and a division was called.

As fewer than ten members (viz., Mrs. Ballinger, Messrs. Hemming, Molteno and Sullivan) voted against the Question, Mr. Speaker declared it affirmed and the amendment dropped.

Original motion put and agreed to.

I move—

This will be my last opportunity to voice my most emphatic protest against this Bill and to oppose it to the utmost of my ability. So far as the Bill is concerned, I think that the Minister, if he wanted to tell us what he really feels, would say that it is not a fair tax. I think he realises that in view of the fact that this tax is being imposed on poor people, it is a tax on those who are least able to bear it. I want the Minister to tell us definitely whether, as we understood him to say, it is his object by means of this tax to reduce the consumption of wine. If that is so, it means that he is doing an injustice not only to the wine farmers, but to those people as well who drink wine for the sake of their health, and who even use it as food. I realise, of course, that some people drink too much. We do not regard people who drink to excess as an advertisement for our product. What we want is that everyone, including the Minister himself, should drink, but drink in moderation. Does the Minister share the views of the abstainers that every man who drinks a glass of wine is a potential drunkard? Is that his attitude? There are millions of people who have been taking a drink all their lives, who take a drink with their meals, and if the Minister is a Liberal, as he contends he is, he should not impose a tax which tends to deprive people of that right and that benefit. This tax will fall most severely on those who are least able to bear it. In regard to the argument that the wine farmers themselves do not pay the tax, it is true that the individual who buys the wine pays the tax, but that is the position in regard to all taxes. If you buy a bit of land and you pay transfer duties, the man who buys the land pays the transfer duties, but he takes that into account and he pays so much less for the land. So far as wine is concerned, the fact of the matter is that people will drink less wine because they have to pay more for it. Four pence on a bottle of wine is a big tax to a poor man. What right has the Minister to deprive the poor man of the privilege of the benefit to be able to buy a bottle of wine? Personally I have nothing against the total abstainers. They are doing praiseworthy work if they teach people not to drink to excess, but we feel that our industry has the right to exist, and the abstainers do such peculiar things sometimes and they do them in such a peculiar fashion that one can hardly believe that they are honest and sincere in their intentions. That is why I feel that this tax is unreasonable and beyond the purchasing powers of the people on whom the tax falls, and the eventual result must be that the consumption will drop and that the farmers will find themselves in queer-street. It is easy to talk at a time when money is plentiful, as it is today, but we as farmers realise that we have reached the very highest point, and if the Minister studies the Excise Department’s figures for last month, he will find that there was a drop of 50,000 gallons in the consumption of brandy, and this new tax of his will also lead to a drop in the consumption of wine. Has he ever worked out what the tax amounts to? It amounts to 4d. on a bottle or 1s. 11d. on a gallon and there are 127 gallons to a leaguer. It is a tax of about £12. The farmer gets £7 for a leaguer of wine, and then there is the ordinary tax of 10s., which makes it £7 10s. The State takes almost twice as much as the farmer gets for his product, and the price is thus forced up to £20. The farmers have no opportunity of increasing their price, because the State is taxing the product out of existence. If the price is put up any more, people simply will not drink wine. What is to become of the industry then? If the Minister were to tax the more expensive wines, the wines which the rich people drink, I could understand it, but here he comes and deliberately taxes the poor man. Why should the farmer be called upon in this particular instance to pay for the war? He has to contribute out of all proportion, because he cannot increase his price—if he does so it becomes uneconomic. If the price is made too high, people will drink all kinds of other stuff—such as patent medicines and methylated spirits—not to mention skokiaan. The Minister as a reasonable man should realise that this tax is entirely beyond the power of the poor man and that it has a most detrimental effect on the wine industry. The price is so high today that the farmer cannot raise it any more, because if he does, people will no longer drink wine. The wine farmers get a stable price; unlike the potato farmers—they do not get £2 5s. one day and 12s. 6d. the next, as the potato farmers do. But I can assure the Minister that they do not get the price they should get in relation to the increase in production and living costs, because they are getting practically no more than they used to get. The increase in price does not counterbalance the increase in their costs. We fully realise that the man who drinks the wine is the person who pays the tax, but the Minister should realise, too, that what he has now done puts the wine farmer in this position: that he cannot get anything extra for his product with the result that even during these flourishing times while the prices of other agricultural products have gone up he is not able to make up for the bad times which will come. One would have expected that the wine farmers would have been given the opportunity of making up now for the bad times which are ahead; but they have not been given the chance of doing so. There is no other country in the world which taxes the wine industry, and where it is done the money made out of the tax on wine is given back to the farmers. The position simply is this—that the wine farmers feel that every step that is taken today is directed against them and their organisation. And so the farmers throughout feel that many of the measures passed by this Government are directed against their organisations. We hear rumours in the lobbies that co-operative societies are to be taxed under the provisions which are to be introduced in the omnibus Bill. It has been openly stated that that is going to happen, and I want to assure the Minister that the wine growers, although they are getting a good price for their product, are not relatively speaking getting what they should get. The price is a good one because it is stable, but the wine grower does not get what the other farmers get, and if it were not for the fact that the wine farmers are at the same time dairy farmers and vegetable farmers, they would not have been in the flourishing position in which they are today. Today they can afford to have a little butter on their bread; but if the price of wine drops after the war, the Minister must realise, in view of the big production which we have today, what it is going to mean to the wine farmers of the Western Districts and of the South-Western Districts. The people in my constituency are only now getting on to their feet again after the ostrich feather slump. They have a chance of getting ahead now, but now the Government steps in to push them down again. I know that nothing I can say Will make any impression on the Minister of Finance. He has a big majority to back him up and he can steamroller this Bill through the House. I also realise that hon. members opposite are human, and they don’t worry about a particular commodity being taxed, so long as it is not a commodity in which they are interested. But I do feel that the Minister should be troubled by his conscience and that his conscience should tell him that it is wrong to continue imposing ever-increasing taxes on the wine growers. I well remember the former member for Kensington (Mr. Blackwell) getting up in this House and expressing himself in favour of a tax being imposed on wine too when the excise on brandy was increased. He was an abstainer and there were other members in this House who spoke in the same strain as he did. I can also remember the answer which the Minister gave those hon. members at that time. He told them that the brandy farmer and the wine farmer were one and the same individual. The farmer who produces good wine also produces distilling wine, and where the farmer who produces distilling wine already pays a huge tax—a tax of 4s. 2d. on a bottle of brandy for which he gets 7d.—it would constitute a double tax on that farmer if his wine were also to be taxed. That was the correct reply for the Minister to give. He said that he did not think the wine farmer paid a reasonable share of the taxation—to his mind he was paying more than his legitimate share, more than he could be expected to pay. The Minister of Finance knows as well as I do that before the war the wine farmers contributed £835,000 on their product. It has now been increased to about £4,100,000. That is what the increased tax means, and year by year it is becoming more. The wine farmers are long-suffering. They are prepared to make large contributions. They do not want to be discourteous or rude to the Minister, but I move among those people, and I know how they feel about this matter. I can tell the Minister, if he should not yet know it, that these people are very much upset about the Government’s attitude towards this industry. It is no use coming here and telling us, for political reasons that the Prime Minister has done this, that or the other for the industry. It is no use telling us that it was due to him that the 1924 Control Act was given to the industry. That is the argument which the politicians use among the wine farmers. So far as I know the history—and I know it from beginning to end—that Act was passed as the result of an agreement between Gen. Smuts and Gen. Hertzog. But even if he had done it on his own, the fact remains that he could not have done anything else. The wine growers were in such a precarious position that they would have become a burden on the State. Nor are the powers given the wine farmers under that Act so very marvellous. The wine farmer can only fix the price for the wholesaler and he has no control over the sale price or over the price paid to the producer. He only has the right to fix the price for the wholesaler, and that right does not constitute anything in the nature of a monopoly. If the wholesaler is dissatisfied he can apply for arbitration to determine whether the price is a reasonable one. We are satisfied with it, however. We prefer to settle these questions by means of arbitrators rather than be dependent on the Minister of Agriculture, as we are in regard to good wine. If we had kept all our control systems out of the hands of the Government, and if we had introduced such a system, we would not have had all the difficulties and all the objections which we are having today. The whole question could have been settled satisfactorily and fairly. We are keen on the rights which we have secured in our position as wine farmers and which have enabled us to preserve the industry. So far as good wine is concerned, we have to get the Minister’s consent. That causes us a lot of trouble. The farmers are at the moment getting £7 per leaguer, and we consider that that price should be raised. During the last war we got £10 for distilling wine and after the war we got ever more. We are now getting £5 10s., and that is what we were getting even before the war. The progress made by the industry is not attributable to the high prices, but to stable prices. So far as good wine is concerned, I want to say that this is the position: we have been agitating for years to get the law passed in regard to good wine, and at long last a Bill was introduced in Parliament. That was in accordance with a promise made to the wine growers. The Government which was in power at the time had made that promise. When war broke out that Government was defeated, and the present Government proceeded to give effect to the promise made by the previous Government. Anyhow this is how I look upon the position. It is no use looking well after a milch cow, and getting a pailful of milk from that cow every day and then when everything has been done, upset the whole bucket. And that so far as I can see is going to be the upshot. We have been told to address the Minister quietly and courteously and not to get angry. Even the Minister of Finance told us so. Well, the representatives of the wine growers on the other side of the House have spoken very nicely and very courteously to the Minister. We have asked the Minister to give us an assurance that this tax is going to be a war tax only. He told us that he needed money, so we asked him to give us an assurance that this tax would be a tax for the period of the war only and that it would go immediately the war was over, so that if the Government then in power should want to impose it again, it would have to come to Parliament with a Bill. The Minister has refused, however, to give us that assurance. He told us that he could not commit the future Minister of Finance. Nobody asked him to do so. If he had made this tax a war tax, the Government in power after the war would be able to introduce it again if it should want to do so. But I do not think such a Government would want to do it. In any case, the Minister of Finance refused to give us that promise; what are we to conclude from that? Experience has taught the wine grower that once a tax is placed on his product it is not taken off again. We know—the tax on brandy started at 2s. 6d. per gallon; it is now 25s. per gallon on the best brandy, and on the other brandies it is even higher. And so it will also go with this tax on wine. I want to warn hon. members here who represent wine farmers that once this principle of a tax on wine is accepted, we are going to find that as soon as the Government is in any trouble, it will increase the tax. We have often been promised in the past that the tax would be taken off, but once the tax has been increased the increase has never been taken off. Hon. members can take it from me that we are going to have the same thing all over again. The tax will not come off. In Mr. Merriman’s days one tax was reduced, but it was only done after several thousands of wine farmers had threatened to surround Parliament. The Minister of Finance has now told me that as far back as the days of the East India Company there was a tax on wine. That is no answer to the argument. I said that no wine-growing country taxed its wine. The Minister knows what the position was in those days. The Company was a company of a foreign country—and that was how the tax was imposed; it was not imposed by the citizens of the country. The East India Company to all intents and purposes was a foreign company when it imposed the tax—the tax was imposed at the behest of a foreign company and not by the citizens themselves. So far as the Minister’s proposal is concerned, I have done my duty to the best of my ability. I cannot take the matter any further. The Minister insists on imposing this tax in spite of my arguments and pleadings. I shall never be able to convince him. And unfortunately it is a fact that I have not received the help I should have received from the representatives of the wine industry on the other side of the House. It is no use saying that this is war time; it is no use saying that we hope that all will come right after the war. Hon. members over there know now that they can no longer use that excuse. They know the tax will not come off after the war. It must be clear to themselves and to everyone else that they have put politics above the interests of the people they represent. Well, if they want to act in that spirit against the wine industry—let them do so. The other argument which is being put up is this: Look at what the Government is getting out of the industry now; it must be in the Government’s own interest to lock after the industry; it will have to nurse the industry. I have never in all my life heard an argument like that. I suppose it can also be argued now that because the mines pay taxes to the Government, the Government is now starting to pay them subsidies. We as wine farmers want to be independent of the Government in the sense that we do not want to get any money from the Government. All we want is to get a reasonable and fair price for our product so that we can make a reasonable and fair living. It seems that the Government takes a pleasure in turning certain sections of the population into beggars. Let them go on in that way and the future will show what will happen and whether the Minister is right or whether I am. I say that this tax is going to prove itself one of the biggest curses imaginable to the wine industry.

I am sorry that those hon. members representing Western Province constituencies, whose interests are at stake, cannot participate in the protest which we on this side of the House have lodged against this Bill. They say that in the first place this is a war measure and for that reason they do not want to make the position more difficult for the Government. But when we came forward with a proposal that this tax should only be for the duration of the war, they did not support us either, but they voted against our proposal. They are now supporters of this tax on wine as a tax which is to remain in force for all time. What is their reply going to be? As they have already given their reply I just want to tell them the condition in which the wine industry was when the wine farmers started organising in 1927 to establish the K.W.V. I happened to attend the meeting at Paarl, accompanied by my father, when the K.W.V. was established. The wine farmers at that time were dispirited, yet they did not appoach the Government for help. They put their own house in order. This was in the days when the farmers, especially in the Robertson district were getting £1 10s. and £2 10s. for their distilling wine. Times became more and more difficult. This was in the days when they opened the bung-holes and poured the wine out into the rivers and over the flats. Yet they did not approach the Government. This was in the days when they had to deal with the big wine firms. I remember one day on the farm when 300 or 400 leaguers were distilled because it did not pay to sell distilling wine at the then ruling prices. One of the firms telephoned and said that he was prepared to pay £12 per leaguer for brandy. That was the position in which the wine farmers found themselves, and now, after 25 years, they have got their house in order; they are now building up reserves so that they may be able to assure the future of the industry, and this is the time the Minister of Finance selects to impose a tax which like the sword of Damocles will hang over the heads of the wine farmers. The Minister does not know what the position is going to be when the war is over. We could still appreciate the position if members opposite stood by the Government and said that this tax must be levied for the duration of the war; but why do they not use their influence in supporting us and urging the Government not to impose this tax for all time but only for the duration of the war? Their action has resulted in the tax being approved of for all time. Hon. members should realise that there are influences at work in their party which have for years been urging the imposition of a tax of this nature. The former member for Kensington (Mr. Blackwell) asked for it; the hon. member for Green Point (Mr. Bowen) asked for it. Those elements are beginning to become more and more influential in that party; they must get rid of those influences which are making themselves so strongly felt in their party. The sooner they do so, the better. The farmers of the Western Province are a stabilised community who have built up this industry by dint of very hard work. They work together and help each other and now that the industry is threatened again, we find that hon. members opposite have not got the courage to stand by us. If we analyse the position we find that before the war the consumption of brandy amounted to about 800,000 gallons. Today it is roundabout 2,000,000 gallons. The position is abnormal on account of no whisky being imported. We have figures which show that at the end of last year a quantity of whisky was allowed to be imported, with the result that the figures in regard to the consumption of brandy dropped immediately. When whisky is imported again after the war, the consumption of brandy will go down at once; will hon. members on the other side support us in a proposal to prohibit the importation of whisky? No, they will not do so, because the hon. members for Hottentots-Holland (Mr. Carinus), for Worcester (Mr. J. P. de Wet), and for Paarl (Mr. Faure) will tell us that South Africa is a member of the British Commonwealth of Nations and that it is our duty to promote trade among the Dominions. They will tell us that the Commonwealth is a big family and that we cannot allow the importation of whisky to be stopped. Then it will become a matter of politics once more. They accuse this side of the House of dragging politics into the matter. They are the people who are bringing in political issues.

If you were to drink whisky you would not say such ridiculous things.

The hon. member over there can only talk about things being ridiculous—but his whole attitude is ridiculous. He has not got the courage to get up here and state what his attitude is. All he can do is to pull off his coat to indulge in fisticuffs with mine workers in Germiston. The whole position is this: that we are compelled to build up our reserves for after the war. This is the time for us to build up reserves with a view to the bad times that are ahead of us. For the present the surplus has gone to a certain extent, but last year it was still 47 per cent. and what are we going to do when the war is over and whisky is again allowed to be imported? The surplus will continue to rise; the farmer will again have to be satisfied with £3 and £4 for a leaguer of wine, and perhaps even with less. The only reason why the farmers are still able to make a decent living is because they are organised and because all the wine farmers are members of the Co-operative Society. But we know that influences are at work on the Government side, especially those representing the wholesale wine trade, which are anxious to break the power of the K.W.V. and that is why it is so necessary for us to take care of the morrow. I would not object so strongly if the Government were to impose this tax only for the present abnormal times, but hon. members opposite representing the wine farmers have not got the courage to get up and to say to the Government, “So far and no further”. After the war the wine farmers will have to tackle big things in order to extend their foreign markets. We shall have to expand in Europe and in the East because under the terms of the law the K.W.V. has to sell its surplus abroad. The surplus has to be exported, so we have to build up our reserves, because those reserves are needed to build up our foreign markets. We have already seen signs of the consumption of wine dropping in consequence of this tax. It is being said in certain hotels and canteens that there is a drop in the consumption of wine as a result of this increase. I want to ask the Minister to give us an assurance in his reply that this tax will only be temporary. That is what the wine farmers are worried about. They know that they have to meet the future and if the Minister can assure us that this tax will be taken off when the war is over, we shall be satisfied.

The name of the hon. member for Worcester has been referred to in this debate and that is why it is necessary for me to say a few words. I thought I had made my attitude perfectly clear and that it would not be necessary for me to do so again. I deny that I put political interests above the interests of the wine farmers. I am in agreement with most of the remarks of the hon. member for Swellendam (Mr. S. E. Warren). He put the position very clearly and very ably before the House and I agree with him to a large extent. There is only one difference between us and that is our outlook on present conditions. If I think what I have contributed in my small way to the war effort and what he has contributed then there must be a difference between us. My son is in Egypt—he has no son there. That is the only difference between us about the circumstances of the present. The Minister in framing his estimates was faced with abnormal conditions, and that is what I am remembering today. I have full confidence that if the wine farmers in days to come find that they are in trouble and that things are going against them, the Government will meet them if they approach the Government. That is what I hope and that is why I feel that it is not my duty to corner the Minister and to say to him: “You are only to impose this tax until such and such a time.”

That hope has to console us in all our sorrow.

Today we can say that the position is not so precarious, but we hope and trust that if things go wrong and we approach the Minister the Government will meet us in our difficulties.

The hon. member for Swellendam (Mr. S. E. Warren) has told the House that this is his final opportunity of lodging a protest against this proposal. Well, he has again expounded his case in the same way as he has done before and I do not propose going into all the points he has raised. I just want to mention three points. He said that I had stated that I had levied this tax with a view to restricting consumption. That is not so.

Read the Hansard report.

The object of this tax is to obtain revenue. This Bill is no more intended to reduce consumption than it is to break the K.W.V., as the hon. member for Gordonia (Mr. J. H. Conradie) has said. The next point is this. My hon. friend asked what right I had to deprive people of certain benefits which they were making use of. This Bill is not depriving anyone of any benefits. If people want to avail themselves of the right to drink wine—they must pay for it. The hon. member further said that there was not a single wine producing country which had imposed a tax on wine. According to my information there very definitely are countries which have imposed a tax on wine—viz. France and Italy.

Yes, but the yield from the tax is used for benefit of the wine growers.

No, not as far as I am aware. In Germany, too, there used to be a tax on wine, but Hitler took it off.

That at any rate is one good thing he has done.

Now I just have one final point which I want to touch on. The hon. member for Worcester (Mr. J. P. de Wet) was quite right when he said that he felt confident that if the wine farmers were in trouble and they appealed to the Government, the Government would be reasonable with them, just as it had always been in the past. The Government has given evidence of that in the past, and my hon. friend therefore has sound cause for the confidence he expressed.

Motion put and the House divided:

Ayes—56 :

Abbott, C. B. M.

Alexander, M.

Allen, F. B.

Barlow, A. G.

Bawden, W.

Bell, R. E.

Bosman. J. C.

Bowen, R. W.

Carinus, J. G.

Christie, J.

Christopher, R. M.

Clark, C. W.

Connan, J. M.

Davis, A.

De Kock, P. H.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Faure, J. C.

Fawcett, R. M.

Friedman, B.

Hare, W. D.

Hayward, G. N.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Johnson, H. A.

Latimer, A.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Moll, A. M.

Morris, J. W. H.

Mushet, J. W.

Payn, A. O. B.

Payne, A. C.

Raubenheimer, L. J.

Robertson, R. B.

Russell, J. H.

Solomon, B.

Solomon, V. G. F.

Steyn, C. F.

Stratford, J. R. F.

Tighy, S. J.

Trollip, A. E.

Ueckermann, K.

Van der Byl, P.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Williams, H. J.

Wolmarans, J. B.

Tellers: J. W. Higgerty and G. J. Sutter.

Noes—22:

Bekker, G. F. H.

Boltman, F. H.

Booysen, W. A.

Bremer, K.

Brink, W. D.

Conradie, J. H.

Grobler, D. C. S.

Klopper, H. J.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Olivier, P. J.

Stals, A. J.

Steyn, A.

Strauss, E. R.

Swart, C. R.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Teller: P. O. Sauer and J. J. Serfontein.

Motion accordingly agreed to.

Bill read a third time.

I move—

I would be failing in my duty if I did not lodge a final protest against the principle of this Bill viz. the principle of the surrender of South Africa’s whole economic life into the hands of a small group of capitalists. Fortunately we succeeded in Committee to get an important amendment passed. We proposed—and the Minister fortunately agreed—to restrict the voting power of a big shareholder. In the past, 51 capitalists in South Africa, could, if they conspired, control the whole of the Reserve Bank and thus control the whole of South Africa’s monetary and credit policy. We fortunately proposed to restrict the voting power of the shareholder and today 51 individuals can no longer do so, today at least 100 individuals have to conspire before being able to exercise such control. In that respect an improvement has been effected but the principle remains unchanged viz. the principle of the surrender of South Africa’s whole economic life into the hands of 100 capitalists, if those 100 capitalists want to conspire. The enemy of national welfare in South Africa in the past has been this—that the country’s credit has been manipulated to serve private interests for their own benefit and often at the commands of people overseas. That has been the curse in the past of South Africa’s whole economic system—the manipulation of credit by private interests to their own benefit often at overseas command. We have tried to destroy that principle in South Africa, but unfortunately we have not succeeded and today we are once more faced with the situation that the whole machinery of credit control in South Africa is entrusted into the hands of a small group of people. It is due to that being the position in the past that one economic disaster after the other has hit South Africa. What happened in 1922; what happened in 1930, 1931 and 1932—there was manipulation of credit by private interests for their own benefit and to the detriment of the country. We know that we shall be faced with very difficult and dangerous times in the post-war period. We want to try and guarantee South Africa against the consequences. Unfortunately we have not succeeded in doing so but there is one thing which is very certain today and that is that if, after this war, we get another big depression such as we had after the last war, if we get credit manipulation by private interests for their own benefit, the responsibility rests with the Government and nobody else, because the Government. In this Bill, with their eyes open, have decided to give private interests this terrific power in South Africa. The Government will have to take this responsibility for it. They cannot push it on to somebody else. During the debates on this Bill so far some important facts have come to light and I want to avail myself of the opportunity to emphasise these facts. First of all it has been shown that the Reserve Bank is a private bank now which by no means comes under State control. I hope the hon. member for Vasco (Mr. Mushet) has also taken note of that fact. During the second reading of the debate the hon. member for Vasco made bold to say that the Opposition had demanded that the State must lay down the monetary and the credit policy of South Africa, “but” he added “you have it.”

It is so.

In view of the fact that the hon. member for Vasco, who is the Government Party’s financial mouthpiece outside the Cabinet, made such a statement, it seems to me that I should again read Mr. Chairman’s ruling while we were in Committee. Now what did Mr. Chairman rule: I should like to quote it to the House. I had moved that the State should nominate a majority of the directors of the Reserve Bank. The Chairman thereupon ruled me out of order and this was his ruling—

That is de jure not de facto.

Possession is nine points of the law, let me remind the hon. member of that. If private interests have the right to control the bank they will do so. There we have it and I hope the hon. member for Vasco is ashamed of the statement—is ashamed of his assertion—and I hope we shall never hear him make it again. It is stated here clearly—

In other words we know now and the country knows that the Reserve Bank is a private Bank which is under private control; there is no question of State control, and because the Bank has to control South Africa’s credit policy, we have this position that a private Bank and private interests regulate the credit policy in South Africa. That is an absolute incontrovertible fact, and I hope the hon. member for Vasco will frankly admit it. The second point which came out in the course of the debate was this—and it is most important—that it seems to me that the Minister of Finance at one stage doubted whether the principle in this Bill was sound. We know that the Minister of Finance was prepared to consider changing the composition of the Directorate. Why did he do so? He was prepared to place six Government representatives in the Directorate, and those together with the Governor’s deciding vote would have given the Government control over the Bank—it is true that the safety margin would have been very slight, but still it would have meant control. It goes to prove one thing and that is that the Minister is no longer convinced in view of post-war conditions that the principle of this Bill is a sound one. I ask hon. members whether in view of the responsibility resting on this House we can face the post-war period with machinery of credit control in South Africa under which the Minister no longer has full control, machinery in which we certainly have no confidence and in which apparently at the moment no one has full confidence. That is the second point I want to raise. The Minister hesitated. He was in doubt. He is no longer convinced that the principle is a sound one. At one stage he was prepared to introduce an amendment, but after the Chairman’s ruling, he abandoned the principle and he did not do what this side of the House thinks it is essential to do for the sake of our national interests. The Minister is in doubt today and I do not believe that we dare take the responsibility of facing the post-war period with a law in which the Minister himself has not complete confidence.

But I have complete confidence in it.

Then why were you prepared to amend it. As a joke? Does one amend the principle of an Act merely as a joke? The Minister will have to give some different reason to accept an amendment. We have two important facts which have come out, and we have emphasised those facts. First of all there can be no question today of State control over the Reserve Bank and therefore over South Africa’s credit policy. There can no longer be any question of that. Secondly the Minister doubts whether he has acted wisely in withdrawing the State’s control over the Reserve Bank and over the credit policy of South Africa. A third thing has come to light: and that is this; that if South Africa wants to eliminate the fluctuations which we get from time to time in the country’s commerce and industry, the fluctuations which are the cause of the depressions which hit us from time to time, there is only one party which the country can depend on to do so and that is the Nationalist Party on these benches. During the discussions in this debate another party has also come forward with this question. It was amusing to listen to the glow of conviction with which the hon. member for Krugersdorp (Mr. Van den Berg) and the hon. member for Germiston (Mr. Payne) spoke about the wonders which could be created by means of a State Bank in South Africa. They almost made me believe they were right, and I do believe it myself. The hon. member for Krugersdorp said: “We are the only people who can save South Africa.” But what do they do when the psychological moment arrives to save South Africa by means of this Bill, they didn’t just walk but they ran as fast as their legs could carry them to vote on the Government side.

Dunkirk.

Yes Dunkirk. There is only one party which is prepared to take that important step—and it is a step which New Zealand, Australia, Canada, all the young progressive countries in the world have found it necessary to take. The Minister for a moment also wanted to take that step but apparently he lacked the courage or something of that kind to do so. There is only one party who is prepared to do so and that is the Nationalist Party.

But you people didn’t do it.

The attitude of this side of the House is this; that there are certain things which are so important to the life of the nation that they cannot be left in private hands. It is a recognised fact for instance that you cannot leave a State’s water supply in private hands. These are essential services which the community as a whole has to have.

What did you people do under the Irrigation Bill.

The Government has the powers; there are certain services so important that they cannot be left in private hands. Water supply, electric supply and power are of such importance that they cannot be left to private enterprise and here we have the most important of all—the provision of sufficient credit in the country to cause the machinery of commerce and industries to act smoothly, to regulate the provision of credit in such a manner that we are not going to have a boom period at one moment and a depression at the next. This is not a matter which can be left in private hands. It is too important from a national point of view to be left in the hands of private interests. We shall have to face very difficult times after the war. Everyone is voicing the hope that we are going to create a certain degree of social security after the war. I say there is only one way to create social security and that is first of all to give the country a degree of economic stability. That is the foundation on which you are going to build social security in the future—a degree of economic stability for the future. You cannot achieve this economic stability—we’ve had bitter experience of it in our history if you entrust the availability of credit in South Africa to private interests and allow them to regulate it to their own benefit. It is something for which the State and the State alone must take the responsibility. I must say honestly that I am looking to the post-war period with fear and anxiety.

I am afraid that owing to its lack of power of control the Government will be powerless, if those elements controlling huge financial resources should conspire in this country. And it is because those are my feelings, I consider it my duty to lodge my final protest against the Bill.

Business suspended at 1.0 p.m. and resumed at 2.20 p.m.

I should like to add a few remarks to what was said by the hon. member for George (Mr. Werth) on the third reading of this important Bill. My first observation is this: I do not Know what the views of other hon. members are, but I personally am beginning to feel discouraged at the little time which the Minister and the Government have for constructive legislation. The entire attention of the Government and of the Minister and of the House is taken up by war measures and the acquisition of funds for the war, and the Minister is unable to give attention to really constructive work which should have engaged our attention. His eyes are fixed on Mars and at the same time he has to take measures to sacrifice the nation on the altar of Mammon. During the second reading of this Bill I as well as others, tried to emphasise three important defects in this Bill. The first is that the Reserve Bank retains its private character, which is in conflict with modern development. In the second place we pointed out that the powers which are given to the Reserve Bank in this important period, on the eve of even more important potential development, are insufficient for the important function of credit control; and finally there are gaps in the Bill, because, in the first place, it does not make provision for what I regard as being in the interests of the State, namely, the necessary machinery to make available clearing facilities. I know that the Minister’s reply is that facilities do exist. I regard those facilities as insufficient and I say therefore that the “necessary” facilities do not exist, After the ruling of the Chairman, which was again brought to the notice of the House this morning by the hon. member for George, we are unable to pass further definite comment on the characterisation of the Reserve Bank as a private institution, a private institution which is not only being perpetuated in its private character, but the private character of which has now been publicly declared and stated. Previously the world may not have realised the scope and intensity of this private character, but today the whole world knows that the Reserve Bank is a private institution and that it is controlled by private shareholders. We cannot anticipate events. No one is in a position to know what the reaction will be, but undoubtedly, if the private character of the Reserve Bank is fully realised, it may seriously influence the control of credit and also the necessary clearing system. I do not want to be too pessimistic. I hope the Minister will give his attention to this matter, but in this Bill no assurance is given to us and to the country in this connection. During the second reading debate I tried to draw attention to the fact that since the establishment of our Reserve Bank, considerable development has taken place in the sphere of Reserve Banks in the world. We were the first country after the conference of 1920 to call into being a Reserve Bank, and thereafter at least 25 other states proceeded to obtain central banking institutions for their countries. Since that time the concept of central banking has developed almost beyond recognition. These countries have realised that to an increasing extent the central banks represent the essential state assistance in the various relationships between the Government and the economic life of the country; and from what I tried to quote it is clear that as this concept grew, numerous countries adapted themselves. I do not want to be guilty of repetition, but I drew attention to the fact that numerous countries created essential state banks, while numerous other countries obtained state control of the central bank. They did so for many good reasons, because experience showed that the central banks must be the link by which the Government can keep in contact with banking generally, and by which the country and the nation can give instructions to the central institution to deal with the interests for which it was called into being. After 24 years we had the opportunity of taking into review our central banking system, and to adapt it to that development, to the growth of the concept of central banking. This opportunity has now been allowed to slip by because the Minister said that he was satisfied with the position of the central bank as it is today. I regard it as particularly unfortunate that this Reserve Bank Bill practically leaves the position unaltered, with the exception of a few small amendments, or rather that the Reserve Bank continues to retain its character, with this slight difference, that an amendment is now being brought about with regard to the voting power of shareholders. It is particularly unfortunate that we cannot make any progress with the development of banking. The question is whether that is attributable to an unwise satisfaction on the part of the Government, or whether the Government is afraid of the capitalistic interests with which it may clash. It is my opinion that the Government is afraid of in any way creating a hostile feeling on the part of big capital which is concerned in this matter. The hon. Minister is a very courageous man when he faces the small taxpayer or treads on his toes, but he is particularly cautious when he comes up against big capital. This important weakness which the hon. member for George clearly pointed out this morning, should, in my opinion, be emphasised more, namely that a private banking institution is now authorised under the existing legislation to exercise control of credit in the future. The future, and the demands of the future, which the postwar years will bring about, with its snow storm and its cold realism after the destruction of a great portion of the world, we can hardly visualise, but no one can remain indiferrent in respect of the possibilities of the future, and accordingly we must commence with the building up of institutions which will be calculated to meet the circumstances which have to be taken into consideration. The world is talking today of post-war conditions, and the world is attempting to make provision to tackle them. Here we have had the chance to take the necessary measures in an important sphere, but we are allowing the opportunity to slip by. The other day the justification offered by the Minister, or rather the attitude he adopted, was that he already possessed the necessary powers. We do not question that the necessary powers exist, but the Minister must remember that the powers that he possesses today are not intended to apply in normal circumstances. These are emergency measures; the State has the power by way of regulations. He can exercise the most comprehensive powers. It, however, is a negation of the rights of Parliament to apply legislation by way or regulations. That may be the procedure in other countries but it is just those countries that the Minister of Finance wishes to oppose, because he bases his standpoint on the rights of democracy. But those powers as it is set out in Section 9 of the Act of 1933, is certainly not democratic legislation, because it lays down that practically any matter in connection with banking affairs and currency may be determined by way of regulation. This is an emergency regulation that ought not to exist except in times of crisis, and if the Minister argues that these powers will only be used in times of emergency, he lays himself open to the charge that he is allowing the situation to develop until it reaches a crisis, and that he will then use his powers to relieve the condition of emergency. Such a state of affairs should not be tolerated by anyone. I do not know whether the Reserve Bank wishes to assume these powers. But it is in the interests of the country that these powers should be entrusted to the Reserve Bank and not to the Minister direct. We must bear in mind that we are dealing here with a very sensitive matter. No matter reacts so readily to our credit and trade institutions as comprehensive measures of this sort; there is no other State concern which is so sensitive, and which should not be subjected to emergency regulations. It is a matter which must be given consideration beforehand, and things must not be allowed to develop until a crisis occurs. Accordingly, I think that the Minister is accepting a tremendous responsibility if he risks allowing conditions to develop to a critical stage before he adopts credit control measures and then relies on emergency powers. This is a dangerous attitude. But I wish again to emphasise that in connection with this Reserve Bank legislation there is an omission in connection with clearances. It is not in the interests of the country. Perhaps he will now say to me that a mutual agreement is in existence that will enable the Reserve Bank to exercise control through clearances in its own office. I would just say this, that the clearance of millions of pounds in regard to our trade activities cannot be left to private arrangements. The State must take an interest in that, because any disturbance in regard to clearances, would have a detrimental effect on the country. It could be very detrimental to all trade. It is not right that this matter should be left casually in the discretion of the Reserve Bank merely by offering certain facilities. A responsibility must be imposed on the Reserve Bank to create the necessary facilities, and therefore I would again emphasise that there is this shortcoming in the Bill. I do not think that the extent of our clearing requirements in South Africa is generally appreciated. Before I examine this aspect of the matter, I should like to make my own position clear. I am speaking here as a representative of a constituency. Incidentally, I am also connected with a small banking institution. I have no mandate to speak on behalf of my institution. I have not discussed the matter with my firm, and I am only talking here as a representative of the people. I shall be glad if the Minister of Finance will take note of that. But as a result in the course of my study of the matter I have attempted to discover what the extent of clearances in South Africa is. The actual extent of payments by means of cheques and drafts is undetermined. It is possible only to furnish data in connection with seven large towns in the country, namely Cape Town, Port Elizabeth, East London, Pretoria, Johannesburg, Bloemfontein and East London. For Cape Town, for the year 1936 the clearances amounted to about £94,000,000. In 1938 it was £102,000,000 and in 1940 £122,000,000. In Johannesburg for 1936 the figure was £580,000,000; it was £581,000,000 in 1938 and £575,000,000 in 1940; strangely enough, it was a little less. Between these towns it was for those years a sum of £1,022,000,000. It may not be clear to all what the precise significance of these clearances is to the trade and commerce of the country. Unfortunately I have not the time now to go into that. But it is of such significance that trade and business generally cannot possibly be carried on speedily unless there is a central agreement under which the banks can assist each other to conduct clearances smoothly. Where therefore, we have a central banking institution, I say that it should be the duty of that banking institution to provide for a proper system of clearances in the country. I further want to point out that the figure in respect of clearances has increased considerably. In January, 1944, it was £136,000,000 for the one month. In March it was £144,000,000. We therefore find that for the whole year the figure will be very much higher that it was in 1940. I don’t want to go into details, but I do want to give the House some idea of the difficulties of a smaller banking concern. I don’t want to ventilate any grievances against any particular body or institution. I am discussing it from the point of view of principle that no provision is made for proper adjustments. In my evidence before the Select Committee on the 1942 Banking Bill I put the position as follows—

1. (a) Clearing:—Under the circumstances set out above, the institution is obliged to discount for cash all cheques deposited with it and drawn on other local banks at the banks in question. Conversely the other banks have to do likewise. The amounts involved in cash clearings between our bank and the other banks, and vice versa, in respect of the last six months of 1941, were as follows—

Now a branch has to prepare if necessary to transfer money to 40 other branch offices in Johannesburg. This involves risks and expenditure and it is unfair. It is an anomaly which exists only because of the lack of proper clearing facilities. I should also like to refer to the evidence I gave in consequence of a question put to me by the hon. member for Cape Town (Castle). He asked me, “Your bank is very much curtailed in its operations by that?” And my reply was: “Yes.” And then the hon. member went on to ask—

That was the experience of existing banks under the system which is followed by commercial banks with their own closed clearance system. I want to admit that the position in that respect has improved considerably. But in spite of that the possibility of currency having to be taken from one bank to another is not eliminated. The need which exists in this country has been felt also in other part of the world, and the extent to which that need has been felt has caused the position to change to such an extent that the control over clearances has even been taken out of private hands. With the leave of the House I want to quote from a publication by Dr. M. H. de Kock, “Central Banking.” Dr. De Kock describes the development in France. He draws attention first of all to places where Central Banks are called to do the clearance work. For instance he refers to Germany and to certain States in South America, and then he tells us about developments going on in other countries where there is no such obligation on central banks. And under this heading he says—

1. (1) In those countries of Europe where the system of payments by cheque or transfer and of clearings between banks developed very slowly, the central bank was obliged, as Lemoine said of the Bank of France, “to follow, in agreement with the Government, a systematic campaign in favour of the operations of clearing and transfer.” According to statistics cited by him, the efforts of the Bank of France between 1919 and 1926 achieved the quadrupling of the number of clearing houses and the trebling of the turnover of the clearing houses and of the transfer of funds by the Bank of France. In fact, the lack of adequate transfer facilities in France has been submitted as one of the main reasons for the establishment by the Bank of France of a network of branches and agencies all over France.

That is the development which has taken place as the result of the laxity on the part of private enterprise to look properly after clearances for the benefit of the State, and the State was compelled to step in and to compel the banks to do those things. It is remarkable that in many countries where at one time private banks existed, there are banks today under the control of the State to attend to this service. Let me try to give the House some idea of the position in the United States of America by quoting a few sentences from Dr. De Kock’s book—

1. (2) Under this nation-wide plan a Reserve Bank or any of its branches accepts from the commercial banks cheques for collection at par in any of the towns within its area of operation or within that of any other Reserve Bank or branches thereof. The account of the collecting bank with its Reserve Bank or branch thereof is credited, while the account of the paying bank with its Reserve Bank or branch thereof is debited, without any charge whatever …

Does the House realise the value of the service which a central banking system is rendering the American people, and does it realise the cost and the inconvenience it has been able to avoid? I could have quoted a great deal more from Dr. de Kock’s book about the position in America. But I have asked the Minister to pay some attention to the Canadian scheme and that being so I want to say a few words about it. The Bank of Canada at one time was a private bank. Today it is no longer a private bank. But it used to be under the control of a Board of Directors who were appointed by the shareholders, with the exception of the Deputy Minister of Finance, who was a member of the Directorate but had no vote. Now I should like to quote for the information of the Minister of Finance a provision in the agreement, which has been incorporated in the Canadian Banking Act. I am referring to Clause 129 which deals with clearances. I do not propose quoting the whole clause because it takes up four or five pages, but let me bring the particular clause to his notice. The Minister knows that the Association of Bankers was a voluntary association of all the banks and that it was incorporated under the Banking Act of 1924. That Act provides that every bank that was incorporated at the time, and which might be incorporated in the future was to have the right to join the Association of Bankers. Clause 1 of the Act provides—

Then I want to refer to Paragraph (a) of that clause—

I next want to refer to Clause 7—

1. (a) The schedule to the Act is not printed. All the banks now carrying on business under the Bank Act are members of the Association. Banks incorporated since the 7th of July, 1900, become members as soon as they become entitled to carry on the business of banking in Canada, i.e. when they have obtained the certificate of the Treasury Board under section 14 of the Bank Act.
2. (b) All banks, whether members of the Association or not, shall have an equal voice in making from time to time the rules and regulations for the clearing house: but no such rule or regulation shall have any force or effect until approved of by the Treasury Board.

Now the Minister has doubted whether my conclusions are correct in regard to unwilling linking up with the clearing house and whether that law could possibly be applicable here if we had such an Association of Bankers. I know that the Minister’s advisers differed from me, but let me quote some evidence in support of my point of view. I am referring to evidence in “Commercial Banking Legislation and Control” by A. M. Allen, S. R. Cope, L. J. H. Dark and H. J. Witheridge. Under the heading “Canadian Banking Association” they say this—

The Minister will find it on page 128. I therefore want to emphasise that where the need was generally felt in connection with private banks for steps to be taken to make clearances compulsory, or to place them under the supervision of the state, that hat position also applies in this country, and the need also exists here. That position arose in Australia long before the Bank of Australia was a central bank. In Mackay’s book “The Australian Banking and Credit System” which was published in 1930 I find the following—

I only wanted to touch on this subject to show that it is a question which must be inevitably connected with a central bank. If there is no central bank, if there is no central bank performing this function, and which is under state control, the Government can use any bank. Credit control and clearing are the two principal things in connection with our commercial and credit system, and where the world has taken this step to get as far as it has got now, in regard to this provision—where we find that more than half the world has state control of banking—there we find that the state has imposed certain duties in regard to clearing and credit control on the banks. The development in South Africa will undoubtedly also be that it will inevitably have to become the function of a central bank to exercise control of credit and clearances for the well-being of the state and for the benefit of all its citizens. The Minister of Finance is satisfied to allow this position to continue and to allow the clearances to remain in the hands of private banks. The question is whether the Minister is satisfied that all citizens in the country will get the same facilities as the banks’ clients for the clearing of cheques, bills and all the rest of it. The question is whether the Minister looks at the matter from the point of view of fairness, that every citizen in the country is entitled to fair treatment and to equal advantages and whether he is going to put his imprimatur on preference being given to certain institutions. Not only in South Africa, but in other countries as well those benefits are reserved for a group which have agreed among themselves to cut out other institutions and I want to know whether the Minister is going to accept responsibility in regard to those who are not so benefited. That is the question which should be replied to in this House by the Minister. My time is up and I can do no more than again express my disappointment at the fact that advantage is not taken of this opportunity to make provision for essential services such as those I have mentioned. In connection with a previous Banking Act I tried to get an amendment accepted in Select Committee, but it was not accepted. I am now in this position in this House, that I have to follow one of two courses. I am either to be entirely convinced that the Minister will bear in mind all the interests of the commercial banks in general and that he will see to it that the clients of the various banks are not discriminated against, or otherwise I have to avail myself of the opportunity which will be provided when the proposed amendments to the Banking Act are under discussion, but I do not want to introduce a contentious clause in a Bill on which there is such great unanimity. The Minister will realise, however, that this does not in any way lessen my conviction that we must have a sensible arrangement of affairs so that members of the public will not be compelled to conduct their banking affairs in certain directions to avoid discrimination. I hope the Minister has not yet finished with this matter. Do not let him give the impression that he will allow the banks to dominate him.

When the hon. Minister replied to this debate on the second reading he rather excused himself by saying that after 24 years’ trial he was now consolidating and establishing the Reserve Bank. I would suggest to the Minister that he is actually 24 years behind the time, because in 1920 when we were then advocating a State bank and when the Bill which subsequently became law was before the House that law was actually falling far short of the requirements of this country. It is true, and to that extent we of the Labour Party must pay tribute to it, it was a tremendous advance. When the Reserve Bank was set up we took away from the private banks the right to issue their own notes and the right to control to a certain extent the currency of the country. We also took away at one fell swoop all the government business from the private banks. That all went into the Reserve Bank and that was a tremendous amount of money. I think if we examined it we would see that straight away we established the necessity of having a bank that would not only be a banker’s bank, would not only be a bank for the Government, but a bank that would be in every sense of the word a national bank. Well, we are still far short in this consolidating measure of the position of having a national bank. And Mr. Speaker, it seems tragic when we have a Minister of Finance who has studied the financial position, when we know that he has during his period as a private member in the House and as a member of the Cabinet seen all these manipulations of finance with an alert mind, it is tragic that today he still remains a victim of orthodoxy, and that orthodox outlook is one of the things which in finance, somehow or other, keeps on serving the interests of private capital, keeps on serving the interests of every other activity as against the interests of the people themselves. I regret very much indeed that the Minister ever brought in such a Bill as this. It would have been far better to have carried on with the existing Act rather than the Bill which is now before us and which we are now asked to vote for on the third reading. It is rather a pity that it has to be so. We might, and quite easily, have simply brought in a Bill perpetuating this present system for a further period. I would have preferred it to a Bill which is in some respects worse than the existing Act. Insofar as the handling of gold is concerned, it is worse, because if I read the Bill correctly, we are faced with this position that the Bank will no longer have the sole right to buy and sell gold. I want to put this quite clearly, that while I appreciate that other laws do make provision for it, this is the main Act and this is the Act on which all your subsequent financial arrangements will be made, and whether it is an emergency declaration, or whether it is under any other law, this is going to be the main law, and under this there is no provision for the bank to be the sole buyer and seller of gold, and it may easily be found that as a result we shall have a free gold market in this country. Whether that is wise or not I am not prepared to say at this stage. From a banking point of view at present it would be a bad thing, and from an industrial point of view in this country with our main product being gold, it would also be a bad thing. But there are different points of view on that. But we are tramping on dangerous ground at present, and therefore I want the Minister to tell this House and to tell the country that there can be no question about the buying and selling of gold. The Bill doesn’t say so. This Bill opens the door, whereas the existing Act left the position in the hands of the bank.

It is exactly the same.

It doesn’t read the same, and therefore we want to put it clearly. I want to pursue the position a little further and I want to say that in my opinion it would have been much easier for the Minister to have gone further and to have made this a national bank. I am not using the term State bank, because I would be told that a State bank is the fetish of the Labour Party. A national bank, as accepted by every progressive country in the world today, is long overdue in South Africa, and we have the opportunity now of giving effect to that, but the Minister has not the courage to come forward to the extent of saying that he is in agreement with this, although I honestly believe that he is in his own mind in agreement. It would have been the logical thing to have done, to have come forward at this period of our history, to have put our finances, our control of credit, our entire financial control, over every industry, control over every commercial activity, control over our post-war conditions, in the hands of a sound, solid banking law, that would enable us to meet every post-war difficulty without any trouble. But we find that we are missing a chance like this. When we are faced with a position of post-war reconstruction—we have had a most acceptable speech by the Minister of Demobilisation— we have had that wonderful picture painted about the returned soldier—but we have other pictures of our rehabilitation as a whole—and with that all we are missing this glorious opportunity of taking the key into our hands. Surely it is apparent to all of us that whether it is now, or in the near future it will have to come. Just recently we had the Fishing Bill before us. It has been to a Select Committee and I hope it will go through. That is only one thing, in addition to the other things we are controlling as a nation—whether it is transport, iron and steel or whatever it is. Our local authorities are controlling the markets, cold storage and everything. We are controlling all these things, and yet, with it all, the key to all these key industries is still handed over to private enterprise. It is such a blunder. I know it will come to pass before many years, but I think it is a pity, it is almost a blot on the brilliance of our Minister that he does not grasp this opportunity of doing what is staring us all in the face, to take real control of our banking and credit system. One might say this in justice to the Minister that after all he is not called on to socialise the banking system, but I submit that it is not socialisation at all. It is common sense; it is ordinary common sense to take control into your own hands, which up to now you have left in the hands of private people. I should like to give an instance. It is not new. It was given recently by a very capable writer, Mr. John Strachey. He has issued a book, “A Programme for Progress.” He has put it very clearly. He is not a banking man, but he is a writer and he shows the progress which he suggests is essential for the rehabilitation, not only of nations, but of the world. He puts it very nicely in this way. He says, if you make an application for a loan of £10,000 the bank, of course, goes in the creditability of the person who asks for the £10,000. If they are satisfied that you appear to be a safe person, they ask you to tell them what your proposition is, what you are going to do with the £10,000, and then they agree.

But you have to give security.

Oh, yes. Say the man applies for the £10,000 to put up a factory—it may be for clothing or for a steel industry; but that would require more than £10,000. Whatever it is, that £10,000 is advanced for a specific purpose. And Mr. Strachey says this, never has a bank, when asked to give an advance, advanced more than 10 per cent. of the bank note issued. So if it is £10,000, only £1,000 in notes are required. If it is £100,000 then it is only £10,000 in bank notes. As a general rule that is how it works out. Then a credit entry is made in the bank books: To so-and-so: for £10,000. He then engages an architect, pays him perhaps £200 or £300. He buys a piece of ground perhaps for £1,000. He then puts up a building for five or six or seven thousand pounds. He puts in machinery and exhausts that £10,000. Now in all this process up to now, there has been practically no money, only cheques. The £10,000 credit is there. Cheques are paid out; a few hundred pounds for the architect; £1,000 for the owner of the land; and £5,000 or £6,000 for the builder; the balance for the machinery. The first time that money is circulated in bank notes is when the builder begins to pay his bricklayers, his carpenters and other people and then it is £6, £7, £8 or £9 per week to the different people. They take it to their butcher and their baker and other small tradesmen, and they pay at the end of the week. On the Monday the small traders again pay that money into the bank. The bank notes themselves are paid back into the bank. So that even that 10 per cent. is floating for a matter of a few days. That is the position of the actual money in circulation. Then we arrive at this stage, that when the industry is opened the bank has simply opened a credit balance. There has simply been this 10 per cent. issue of bank notes. The banks take the notes from the Reserve Bank. And when it is all over, the factory is there; the machinery is there; everything is working well. And you might say “what is the asset?” The asset is this, that the labour of setting up that factory has been the true asset in giving that industry. That is what is the ultimate position. The man who has borrowed the £10,000 now for many years has to pay his five, six, seven or perhaps eight per cent. to this private banking organisation. He has to pay that to an institution which I have tried to show created the credit, but the true creation was the labour and the energy of the person concerned setting that up. I have no objection to the banking system in the sense that it is necessary, but I have every objecto it that private enterprise can perpetuate a system like that; that out of nothing it can take from the great mass of the people, from the industrialist, from the commercial and other people, sums of money to pay for these overdrafts, when the State can do that easily and so much more cheaply, and incidentally that private banks are using the credit of the State when they are using that money.

Hear, hear.

It is the State’s credit which the private banks are using when they use that system. I am sure the Minister is thoroughly appreciative of the position. I am not going to suggest that he will get up this afternoon and say that he will retract. I am sure that he will not. But I do feel, knowing as I do with regard to his outlook on finance, that if it was not so orthodox it would be sound.

That is the big “if.”

It is important, and the Minister himself knows what we mean when we say that ….

What orthodoxy?

No, the difference is between his orthodox outlook and the soundness of his finance and there is a very big difference. I don’t want to delay the discussion any further. One could say a great deal more on this subject but I don’t think it is necessary. I personally want to register on behalf of the Labour Party, and certainly on behalf of myself, my protest that we are so behind the times in bringing forward a Bill like this, when the time is overdue, 24 years overdue, for a National Bank to control the finances and the activities of South Africa and to meet these serious problems which we shall have to meet when the war is over.

I have listened with very close attention and with a great deal of interest to the hon. member for South Rand (Mr. Christie). He has denounced the Minister’s orthodoxy, and he has pleaded for what he calls a National Bank or a State Bank, in fact. Now it seems to me that in a debate of this sort, which deals with a very complicated subject, it is important to stick to essentials, and to my mind the essential question is this: What function can a State Bank perform which is not already performed by the Reserve Bank? Now I gather from the hon. member for South Rand, who quotes John Strachey as an authority, that, in the Labour Party’s scheme of things, the chief function of a State Bank would be to create money and lend it to the Government at cost. The Government would then not be obliged to look elsewhere for loans because the Bank could create all the money it wanted. The Government would then be in a position to embark on a vast expansionist programme, providing full employment and a higher standard of life for all. Now to most people the idea that a bank can create money out of nothing seems utterly fantastic.

What did Reginald McKenna tell you?

I am coming to the Minister’s point. As a matter of fact, I agree with the Minister. But to most people it sounds like the schoolgirl’s definition of a parable—a heavenly story with no earthly meaning.

Let US go to heaven then.

As a matter of fact, on this point, the hon. member for South Rand (Mr. Christie) is quite right—creating money out of nothing is precisely what the banks have been doing ever since we went off the Gold Standard. Formerly, when the banks were under an obligation to convert money into gold on demand, money was for all practical purposes the equivalent of gold. The banks’ stock of gold was the limiting factor. But now that this safeguard has been removed, the banks do create money. They create chiefly in the form of money of account, money which is represented by figures in a ledger and which is passed from one person to another by means of a cheque. In addition, of course, they print and hold a certain proportion of bank notes to meet the demand for ready cash. And now that there is no fixed relationship between money and gold, there appears to be no limit to the money-creating capacity of the banks. In actual practice there is a limiting factor, namely, the danger of inflation. We know what inflation means in wartime. In order to counteract the effects of inflation, the Government has been obliged to devise certain special measures such as price control, compulsory saving and special wartime taxes. Now these deflationary measures are appropriate and necessary in the context of a war situation, where production is chiefly devoted to war needs and where the supply of consumers’ goods is limited. But these deflationary measures would be highly inappropriate in peacetime. They would, in fact, defeat the very purpose for which this new money is created. In normal times, deflation is no more a cure for inflation than scalding is a cure for frostbite. The answer to inflation is increased production; for it follows logically that if the rising curve of purchasing power is accompanied by a parallel upward trend of production, there must be equilibrium at every level of the process ….

… which involves complete employment.

… therefore as long as new money stimulates production, prices will remain stable.

If they are controlled.

But as soon as there is full employment, as soon as all the factors of production are in full operation then all the new money will not add a single penny to the national wealth. It will lead only to high prices, and the evils of inflation, In effect, therefore, the Labour Party, in pleading for a State Bank, are pleading for a managed currency. Now to my mind the idea of a managed currency in the present state of the world seems utterly Utopian.

It is managed now—it is supposed to be managed.

It is managed on a basis of gold nevertheless.

No, it is not.

Let me remind the hon. member that it is highly significant that Russia has declared herself in favour of a return to the Gold Standard.

Yes, with a national arrangement.

The reason why Russia prefers gold is not because she is a gold producing country like South Africa …

She is.

… and because General Smuts and Mr. Stalin have a community of interests in that respect. Russia, unlike South Africa, could easily divert the labour force at present engaged on gold mining to other forms of wealth—production without any disturbance to her economy. Russia’s predilection for gold is part and parcel of her realistic outlook on things. For the supreme merit of gold is that, unlike paper currency, it cannot be created at will. After all, the use of valueless bits of paper as currency is a sheer act of faith on the part of the community. This faith rests on the assumption that our economic system will continue to function normally; but this faith will dwindle and vanish the moment there is any serious doubt as to the stability and continuity of our economic system. We know from actual experience that when a country’s economic system breaks down such paper money actually does become valueless. Now gold demands no such act of faith. That is the cardinal factor of the situation. And the role of gold is even more important in the sphere of international economic relations. The war has torn asunder the complex web of international trade, and in the aftermath of war we shall have to face the possibility of defaults, repudiations of international debt and political upheavals. In such circumstances no trader in the international market would be prepared to accept inconvertible paper money which may become valueless at any time.

Not gold.

Only gold; that is the point, because it is important from the point of view of the international trader that money should not only be a claim on goods but a store of value as well. Therefore the present state of the world, so far from undermining the position of gold, is a guarantee that gold will continue to play an indispensable role in our economic system. For us in South Africa that is particularly reassuring at a time when there is so much loose talk about the decline and fall of gold. For us the future of gold is a matter of vital concern. All our plans for industrialisation of this country are based on the assumption that there will be no rapid decline or sudden collapse of the gold mining industry. And in view of the importance of restoring gold to its former ascendancy, the Labour Party will have to abandon the idea of a managed currency, and with it goes their best argument for a State Bank, of course, if we do return to a Gold Standard, it must be under entirely new conditions. The reason why the old Gold Standard broke down was because of high tariff policies, particularly in America. High tariffs turned America into a veritable syphon for gold; she literally sucked in the world’s gold supply and thus forced one country after another off the Gold Standard. It is clear that a new Gold Standard will have to be run in conjunction with some international plan which will promote the free flow of goods and services from one country to another. We are told that such an international plan is now being discussed at expert level. Expert level is a beautiful term. It means that the plan for the time being is beneath the notice of Parliament but above the comprehension of Parliamentarians. Let us hope that the plan will soon emerge at Parliamentary level. In conclusion I want to say this. This Bill meets the conditions of South Africa. It provides for a return to the Gold Standard when necessary. It does not yet give us a State Bank, but it represents a substantial advance in the right direction, and therefore I propose to support it.

I should hate to think that the hon. Minister is in agreement with the eloquent words of the hon. member who has just spoken because I am quite sure that the last thing the hon. Minister of Finance in the Union of South Africa desires is a return to the gold standard …

Under new conditions.

… Unless the hon. Minister can be assured that we return to the gold standard at 800s. per ounce of gold. That appears to be the only valid reason why we in South Africa should have any serious idea of returning to the gold standard. However, I have always been satisfied that economics is a science of mumbo-jumbo. The subject of gold is one about which any member can get up and talk with authority, because no one can contradict him, because neither the economists nor the bankers seem to know anything about this abstruse question of gold; and I have heard some remarkable theories advanced with regard to banking and gold, but I am constrained to say that I have never heard anything so remarkable as the views put forward by the hon. member for Hillbrow (Dr. Friedman). They have almost rivalled the views which we hear from the Minister of Finance himself at times, and it constrains me to think that the Labour Party is yearly becoming more right in their contention that the only reasonable manner in which you can conduct the credit facilities of your own country is by conducting them yourselves and not leaving it to the whims and to the jealousies and to the avarice of private enterprise. No, Sir, this is not an occasion when the Labour Party is preaching a doctrine or a gospel which appeals only to the trade unionists or the working men or the common people. We are now, I believe, preaching something in this House which is in the interests of big business, which is in the interests of commerce, because the banking system as conducted by private enterprise has been known on numerous occasions to have ruined the farming industry, to have ruined the mining industry ….

Absolutely.

I am not so sure that you do not need ruining sometimes. The banking system has been known to have ruined various industries. The industrialist in the Union of South Africa who is prepared to invest his money, whether he is investing it purely in order to make profit, or whether he is investing it for the combined motive of making profit and of developing the country, is also at the mercy of the banking institution—I think I can call it the banking racket without any exaggeration. The industrialist and the commercial people are at the mercy of the banking racket just the same as the ordinary man in the street is. The banks have been known to ruin an industry completely in one fell swoop in their own interests. They have deprived that industry of the capital it possessed, and in the course of that they have of course deprived the workers of the work they should get. It was no trouble to the bankers, when it was much cheaper to manufacture jute in India, to shut up the jute industry in Dundee in Scotland and transfer it lock, stock and barrel to India. The same thing happened to the cotton mills. Was it not the banks who dictated the policy to the cotton manufacturers in Lancashire, and was it not the banks in the United States of America who brought down the first Labour Party government in America by saying: “You must curtail your social services”? That is an undeniable fact. Was it not the banks who brought down the second Labour Party government in Great Britain by publishing the story of: “We must remain on the gold standard”? And they brought the Bishop of London to the wireless to say to the people that if they did not return to the gold standard, their miserable few pounds invested in the post office would be reduced to 10s.; was it not the banks which swept the government out of power? That is the history of banking in our time. Was it not the banks in this country who, following the lead of the late General Hertzog in the most stupid speech in the history of South Africa when he forecast a depression, proceeded to restrict credit and precipitated South Africa into the worst depression of our time? The farmers suffered more than anyone else.

That is why we are still so poor.

Why are you still a Nationalist? That is what I want to know. You are poor because you followed the lead of the Nationalist Party at that time. This existing Reserve Bank as we now have it, was partly responsible for that speech. This existing Reserve Bank was the bank which agreed with the policy then adumbrated, and this existing Reserve Bank was the bank which through the medium of their governor prevented South Africa from leaving the gold standard. This existing Reserve Bank was the bank which through the medium of their governor had the audacity to tell this House that on questions of banking they were supreme. The hon. member for Vasco (Mr. Mushet) told us a very good fairy story the other day. Incidentally, I have just heard other fairy stories from the hon. member for Hillbrow. But the other day the hon. member for Vasco implied to this House that the Reserve Bank took its instructions from the Government. But I can tell you, Mr. Speaker, and this House, that the Reserve Bank does no such thing and that when it is necessary for the Government to require the Reserve Bank to do anything, then the Government has to bring legislation into this House and probably find members like the hon. member for Vasco prepared to support it; because the hon. member for Vasco if I remember correctly, was also one of the pseudo-economists who, following his party line, was prepared to stay on the gold standard.

You are wrong.

In that case I apologise I was thinking of someone else. As a matter of fact, the way in which the hon. member for Vasco spoke the other day reminded me so irresistibly of Mr. Havenga that for the moment I was misled. However, let us hear what Mr. Postmus said when he was examined by the Select Committee on the gold standard. He was asked—

Mr. Postmus replied—

In other words, when the banks got into trouble, they asked the Government to assist, but when they are not in trouble, as Mr. Postmus thought at the time, they can afford to be impudent. Mr. Postmus could not visualise such a postion, but fortunately for this country political movements did visualise such a position, and the Reserve Bank did not need to put that question to the Government. The Government put that question to the Reserve Bank. But the point is that the hon. member for Vasco made the case that the Reserve Bank more or less acts as the Government desires. Nothing can be further from the truth. Here in this instance which is a most important instance concerned with banking and currency and the credit of this country, the governor of the Bank itself almost challenged the South African Government with the question of going off or remaining on the gold standard, and he said clearly that if the Government wanted to go off the gold standard, they would have to pass special legislation, which they had to do. So where is this control that the hon. member for Vasco says we exercise over the Reserve Bank? Of course, I know that the hon. member for Vasco in that excess of Scottish geniality for which he is so famous, has told us that he has met many prominent officials of the Reserve Bank and he has met many prominent officials of other departments of state, and he is quite satisfied in all his Highland simplicity that merely because these officials have told him that they work in a particular way, that they indeed so work. I admire the hon. member’s simplicity. I would like to have it myself, but I can assure him from my Lowland duplicity that I know that the banking system works in the interests of the people who have got shares in the bank and to the detriment of the whole of the people of this country, whether they be workers, whether they be farmers, whether they be industrialists or commercial men. And I go so far as to say that probably this bloody war in which we are now engaged and most certainly the last war, are more to be traced to the machinations of banking financiers than to any other single thing, and I think it is the height of stupidity for any country which feels that they are on the verge of producing something new—and we have been promised that we are going to have a new world—to start off by introducing into this House a Bill which is going to perpetuate the banking system of this country and leave it in the hands of private enterprise. It is the height of stupidity to do that when we are all hoping that we may be near the close of this war. We are told that we have a Minister of Economic Development. Well, I look for him every day pray every morning that sometimes we will hear a word from the Minister of Economic Development because I understand that South Africa is on the eve of great economic development. I understand that South Africa’s effort during the war has been considerable—very considerable. South Africa’s contribution towards the elimination of Hitlerism and Fascism is to be rewarded in this country by a system whereby we are going to have a fair standard of living, where we are determined to eliminate poverty and slums and disease and filth and degradation and crime. I understand that, and I can only see it as a large picture. I do not see it merely as a few promises written down in the newspapers. I see it as a large picture of the work of this House this session. I must admit that the other day—I take pride in having had something to do with it myself—we did get a portion of that large picture in so far as we are prepared to do something for the returning volunteers. But here is another picture. We have seen—it is our own experience in the Union of South Africa—that time after time in a country which has been blessed with almost everything that we desire—a beautiful climate, apart from droughts at certain times and a fairly bounteous rainfall, with progressive farmers, with an abundance of raw material ….

Don’t be sarcastic about the farmers.

I am not being sarcastic. They are progressive.

Which side?

This side, because they are always asking for something. As I was saying, we have been blessed with an abundance of raw materials and we have probably one of the most intelligent populations in the world.

Hear, hear.

One might not always think so. But we have one of the most intelligent populations in the world, and yet our percentage of poverty is probably higher than the percentage of poverty in any other country in the world. I feel that this new Parliament was elected in the light that it was a Parliament which was going to proceed on reconstruction in this country and to proceed upon reconstruction in such a way that we were going to eliminate this pestial poverty with its attendant evils of sickness and disease and crime. I believe at the root of all our economic activities lies the banking system. The banking system is the beginning and the middle and the end of economic development, and so I believe that when you propose to introduce a new system, when you propose to develop your country in a new way, when you propose as a Government and as a Parliament to assume, as you should have assumed many years ago, the responsibility of seeing that everyone in this country is well fed, that everyone is properly housed and decently clothed, I assume then that you must tackle the economic system by its very root, which is the banking system. And what do I find? As the hon. member for South Rand (Mr. Christie) has pointed out very effectively, I find that the Minister is now reintroducing legislation which was out of date 20 years ago. What are we going to have? I am quite satisfied we have got various boards in this country. Will the Minister of Finance tell me how we are going to proceed with the economic development of this country? I am not speaking particularly about the Reserve Bank itself. I hope, Sir, you will consider me irrelevant when I feel that in considering a Reserve Bank Bill we have also got to consider the whole banking system of this country. But what can the Minister of Finance tell me about the economic development of this country if it is going to be left in the hands of private banking institutions? We have already instituted in this country an Industrial Development Corporation. No one in this House seems to know anything about them. It is a hush-hush business. We do not know whether they are industrial or whether they merely have a corporation. I suspect the latter. I do not know whether on the Broadcasting Board they are merely suffering from senility but we hear nothing about the Industrial Development Corporation. As far as I know they have made no plans as to the industrial development of South Africa. It does seem to me that if we are going to have anything in the line of planned economy—the government has suggested that by the institution of the Economic Planning Council who so far have only succeeded in telling us to hold investigations into certain things which I quite agree require investigation, but who so far have not produced any plan—but we still feel that we are going to plan for the future. As a matter of fact we cannot survive unless we do plan for the future. If we do plan for the future who is going to do the planning? If the Economic Planning Council decides on a particular line of planning for South Africa, if that particular line of planning is possibly supported by the Industrial Development Corporation, it can and will, I believe, in many instances be categorically turned down by the private banking interests in this country. I do not need to go very far to find an instance in support of this contention. We have before this House the Fisheries Bill. I know it has a bad smell in the nostrils of many members; but we have a Fisheries Bill where it has been shown that private enterprise has completely and abysmally failed; there we have an industry where it has been shown—and I have seen it myself—where food, some of the finest vitamins, has been deliberately and flagrantly thrown back into the sea. Here we have an industry which is now proposed—one of the few contributions of the Minister of Economic Development— it is proposed that that industry should now be nationalised but under public control.

Why not have State fisheries?

I am coming to the position as it is. What do we find now? That people who are engaged in the engineering industry, people who are engaged in the bricklaying industry, people who are making glasses and cups have all banded together to demand that this Parliament shall not pass this Bill. They have advertised it in the daily press. They apparently are not able to lobby enough, and so we have this concentrated effort on the part of the Federated Chambers of Commerce, on the part of the Federated Chambers of Industries, combining to advertise in six newspaper columns …

Will the hon. member please explain how this argument effects the Bill?

I am coming back to show the influence of private enterprise and the banking system. I want to show how our development has been stultified. I submit that banking is not merely a question of paying your deposit over the counter; of getting an overdraft; it is a question of who shall govern this country, whether the elected representatives of the people or the private banking interests. I contend, and I contend rightly, and there is a mine of information to support me—that in every other country in the world the people elect representatives to govern them, but the real government lies in the hands of the banking industry, of the banking racket; and I am making the case that that kind of position should not be allowed to continue in the Union of South Africa. I have already shown you, whether the speakers were relevant or not, that it was pointed out that on two occasions the banking interests—in one instance in America and in the other instance in Great Britain—brought down the Government of the day. So we are dealing in this instance not only with the mere mechanics of paying money into the bank. I do not wish to talk about the cheques going over the counter. The hon. member for South Rand has explained that clearly to the House. I say that our future in this country is in many instances in the hands of the banking institutions and we as a House of Assembly have to take very serious cognisance of that. I am opposing this Bill because I feel that it is a retrograde step; I feel that it is a step which is unnecessary. It appears that the Reserve Bank Bill falls due to be renewed. But we have Emergency Regulations today. We could have renewed it for another 12 months. But do not let us have a Bill at this time when we are barely beginning as a new Parliament to consider the new South Africa which we propose to bring into being, not only as a result of the war but as some kind of reward for the people who were prepared to go and fight for the country. Do not let us at this time institute a Bill which is going to enshrine and entrench private enterprise in banking in the Union. I am satisfied that all the Government’s fine schemes, and many of them I admire and pay tribute to, all their fine schemes will come unstuck if we leave banking in the hands of private enterprise. Let us deal for a moment with this vexed question of inflation. The hon. member for Hillbrow came back to this question of inflation. I am sorry I did not follow him too well. What he did say was that if extra money is dished out without anything resulting from it you can only have higher prices which, of course, means inflation. That, of course, is true but I have never known a situation in which when extra money is being put into circulation, higher production did not result. I think that the instances of inflation in the last 25 or 30 years, at any rate since the close of the last war, have been cases of deliberate inflation. The German government, for instance, deliberately inflated its currency in order to avoid the payment of war debt. I am not afraid of inflation. When we talk about a State bank, Mr. Speaker, it usually happens that our opponents throw up against us the printing press. Unfortunately, this printing press appears always to have a handle. They turn the handle and things come out. But of course you cannot produce notes unless you have a printing press; you must have a printing press. I can assure you if we were handling a State bank we would not have a handle to our printing press but a more up-to-date machine. There is nothing to be afraid of in inflation. In other words, if the fear complex is created, I can only assume that it is a bad thing to give people more money, because if we all get more money then forsooth we have inflation, and our currency goes to the dickens, I nearly said goes to hell. But how are we going to have a higher standard of living except through the medium of getting more money to spend? Someone said years ago that the real trouble with the world was that we just simply had not enough money to spend, and that, Sir, is the trouble in the Union. We have all the needs, we need food and clothing and shelter, we need some kind of amusement, but we cannot get it because we have not got the money to pay for it, and we have not got the money to pay for it because we are living under a financial system which believes in deflation. It believes that even in connection with our soldiers, who are going to be paid their gratuities in war loan certificates in case the issue of a few million pounds extra might land us in inflation. The Minister tells us, of course, that we have not got it, but if inflation is bound up with a rise in prices then I can assure you we have it to a very severe extent. But inflation can be controlled. If you give more money to the people of the country you can quite easily control the effects of inflation by regulating prices. The Government has attempted to do this, and I sympathise with them. I think they have had a very hard job in this country, because we are unfortunately possessed of a tendency towards the black market even in peace time, but still the Government effort has met with a fair amount of success. I believe, however, that a calculated measure of controlled prices can kill any of these so-called difficulties which would arise from inflation. On the other hand, by giving extra money to the people, by raising wages and so forth, we can attain a higher standard of living.

You want inflation and deflation at the same time.

Why should we not have it? I want inflation as far as the wages of the people are concerned and deflation as far as cost of living is concerned. That is the happy medium, and we can have both. The hon. member who is a financial genius laughs. I know he laughs at his own jokes, but I do not understand why he laughs at mine. He is a shirt manufacturer. I don’t see why if my wages are raised from £7 a week to £10, why he should charge any more for his shirts, and that is the whole story of inflation. If generally speaking we get an increase in the amount of money which we receive, it has no effect on his factory, and why should he want to charge more for his shirts? There is no reason whatever. My hon. friend for Hospital (Mr. Barlow) has the right idea …

Not Hospital.

You look alike, except that the hon. member for Hillbrow (Dr. Friedman) talks sense. If this added amount of money is accompanied by increased production, that is what we are looking for in the Union. We are looking for increased production. The hon. member for Germiston tells us that we are looking for more work. In other words, we are looking for employment for all our people at a reasonable standard of living. If we can give them more money they will spend that money and they will precipitate this extra production. That seems to be the solution. Sir, this is my final word about the domination of the banking system as run by private enterprise. I have met one of the most prominent bankers in this world at a meeting, and he said that good banking practice is to extend your credit in times of depression and to restrict it in times of prosperity. But the position is that the commercial banks do entirely the opposite; in times of depression they restrict your credit. If they are dealing with £500,000,000 when the £ is at a certain level, by restricting credit they can so increase the price of the £ that when it comes to be repaid they get 100 per cent. more. The banks have done this sort of thing from the beginning. I hate to say that the banking system was founded by a Scotsman, but he earned his deserts in the long run. The banking system has gone on in that way ever since its foundation. Here in South Africa, a country which calls itself a sovereign independent State, a free member of the British Commonwealth, we are now prepared to pass a Bill such as this, which will hand over our very life blood, our future and the possibility of any development which may lie in front of us, to private enterprise. I and my party are opposed to the principle of the Bill. We feel that at this time the Government should have given most earnest consideration to the question of the nationalisation of the banking industry. It has given consideration to the nationalisation of other things. As a matter of fact the methods by which the Government deals with agriculture indicates that we are approaching a time when the nationalisation of agriculture will be possible. Why the nationalisation of banking should not be considered I do not know. I feel that the future of South African expansion, the possibilities of the new South Africa to which we look forward and which we are promised, depends almost primarily on taking out of the hands of private enterprise the banking interest of this country and handing it over to Government control.

I do not quite remember whether it is twenty or twenty-four years ago when the Reserve Bank Bill was first put on the Statute Book. At any rate, it was after the last war. On this occasion it seems we are not waiting for the post-war period in order to have some further amendment of the existing Act which falls very far short of the requirements and expectations of the South African Labour Party. If one speaks to the average man in the street, one finds that the thought which is uppermost in his mind is that if the Government can find millions for the prosecution of the war, the Government can equally well find millions for the purpose of eradicating slums, poverty and all the other evils we suffer from. These people who think these fhings and who elected us to Parliament to get on with the job of perfecting means by which the same volume of money can be found for social services as has been found for the prosecution of the war, are unlike us, they are not party hacks, and it is because we are party hacks that we are not able to do the very things we were elected to do. The hon. member for Hillbrow (Dr. Friedman) presented the Labour Party case correctly when he said we desired to find money for the expansion of industry through a State bank, and that such money should be provided free of interest. Money should be provided for Government purposes absolutely free of interest, though, of course, a charge must be made for their service. Whatever the bank has to pay by way of wages and so forth must be secured by charging a fee, but the money should be provided to the Government entirely free of interest, and not only that—money should also be made available to provincial councils and municipalities, who should also be privileged to go to the State bank and get the monev on the same terms and conditions. This is the important feature of it. If the Government wants money it raises it on a planned budget. In a planned budget you have the guarantee that the money so created will be used on essential things, and that is the best guarantee that there won’t be any such thing as inflation, that is the ingredient which guarantees you against inflation. It guarantees a policy of expansion so that you can go on and produce the goods which the country is capable of producing and guarantees also the means for the consumption of those goods. In general, the people at large are beginning to fasten on to the fantasie idea that bankers do create money out of nothing. The more that idea passes into the minds of the people of South Africa and other countries, the more will the demands increase on Parliament and the elected representatives of the people to get on with the job of seeing that this money created out of the credit of the country, is money which belongs to the country and should not be allowed to remain in the hands of the bankers to charge interest on.

Is there any country where it has been done?

Yes, there is, and that provides me with the opportunity of saying that the Labour Party demands a State bank with a managed currency. A managed currency can be related to gold, but it need not be related to gold. The one country which the hon. member for Hospital (Mr. Barlow) has in mind that runs a managed currency is the Soviet Union. The Soviet Union has a system of internal currency which is not based on gold. Notwithstanding that, it is true as the hon. member for Hillbrow has said, that the Soviet country through Professor Varga, the head of the State Planning Commission, has demanded that international currency in the post-war period shall be a currency which hinges upon gold, and the reason is that there shall be some guarantee that the balance of trade existing between one country and another can be suitably adjusted and paid for by the passage of gold. America for years before the war had a favourable balance of trade, and because of that they accumulated gold in their own banks. The point that I want to make is that the Soviet Union in its desire to see international trade relations hinged upon gold, has done that to ensure that those countries which have an unfavourable balance have the means of satisfying their credit relationship by the payment of gold. In South Africa we can have a managed currency based upon gold, because we have the wherewithal in this country to do it. Unless the Government is prepared to do it, all I can say is, as I have said previously, it will be a complete betrayal of the hopes of the people in South Africa, who are expecting from this House something different from that which we now indicate we are prepared to give them.

I merely want to ask the Minister whether under Clause 3 of this Bill it would not have been desirable to have provided that the deputy-governor, as well as the governor, shall have had banking experience. That was provided for at one time in the Currency and Banking Act. I am aware that the present holder of the office was appointed in violation of that provision, having had no previous banking experience. Perhaps the Minister will consider this matter before the Bill finally passes in the Other Place. Then with regard to the admissibility of men with commercial banking experience, I think we want to get away from the idea that it is desirable to make the Reserve Bank a close preserve and refuse to admit officers with other banking experience. I think that would be a great mistake. The standard of banking officials throughout South Africa has been kept commendably high, and we do not want to isolate ourselves from any genius that may appear in the ranks of the commercial banks. I hope, Sir, that although the present restrictions against the appointment of any person as a governor or deputy-governor who has any interest in the commercial banks, is a praiseworthy one, that is not going to be interpreted to mean that no person trained in a commercial bank shall be eligible for appointment.

Oh no, it does not mean that.

I hope it does not mean that any man whose career has developed in a commercial bank is debarred. Then as to Clause 13 dealing with the capital of the bank, it seems to me unnecessary to give power to increase the capital. I do not know whether the Minister has given a reason for this proposal, but with the exclusive right to issue notes it seems to me this is unnecessary. Then there is a reduction of the gold cover from 40 to 30 per cent., that, I think, will cause a certain amount of comment amongst the more conservative people. I cannot recall that the bank has carried less than 40 per. cent. in the twenty-four years of its existence, and I think the ratio of 40 per cent. is also the ratio maintained in the Netherlands legislation.

I will not take up much time, but I want to answer one or two points made by the hon. member for Hillbrow (Dr. Friedman). I was challenged the other day by a member of this House, who said that the Labour Party had not said what they considered to be the right type of bank in a crystal clear way. The hon. member has said that the question is complicated, and then he went on to ask what function other than that at present exercised by the Reserve Bank did the Labour Party envisage as the essential extra function of a State Bank. That question is easily answered. The extra function, to use his term, is that the bank would have to see that it was possible that every person who can work in this country has a job of work to do. I do not know of any more desirable extra function than that, and if the Minister can tell us that it is possible for the Reserve Bank, in its present form, to accomplish that particular thing, then I would have to admit that this extra function was in process of coming into being anyway. But I do not believe the Minister will have the courage to tell us that. The Reserve Bank will be primarily concerned, not as I have said before, with placing people into a job of work to the extent of fully employing the people of our country, but it will be concerned mainly with earning a profit. It is a profit-making institution, and is supposed to earn profits. Now that seems to be perfectly simple. It may involve this: that in this country of South Africa we may have to do without many of our luxury goods. I think it will be a fact that if we embark on that kind of finance people will not be able to import the kind of motor cars which they do import from America; they may not be able to import many other kinds of luxury articles, which we import from America and for which we are paying fantastic prices. Unfortunately for us the gold upon which we look as such an asset is being squandered in the luxury trade. For motor cars we are paying from two to three times their overseas value Radiators, refrigerators and washing machines come into the same category. If one says that they are purchased at three times their value one would not be much out. And we in South Africa may have to consider that we must cut out some of that luxury spending. And if we consider that, whom would it hurt, if in exchange we put our people to work in such a way on our primary requirements. That is the point which I want to make, that the bank would be concerned to put people into work. That work would be of the kind that would ensure the kind of production which we all need instead of the kind of production which we have learned to think we need. It would provide us with food and clothing and housing, three things that would keep all our people very busy if we use the science which stands at our elbow in the exploitation of the resources which we have. That is the function which we envisage the kind of bank which we have in mind, should exercise. And unfortunately we cannot envisage the Reserve Bank exercising that function.

This is a third reading debate, and although it has lasted fairly long, my reply will not be lengthy. I do not propose to go into all the points with which I dealt at the second reading, except in so far as it may be absolutely necessary. The hon. member for George (Mr. Werth) made what he called his last protest against the principle of this Bill and he described the principle as handing over the whole economic life of South Africa into the hands of a small group of capitalists. Anyone who states that this is the principle of the Bill, admits in so many words that he has not read or studied the Bill. As so often happens, the hon. member altogether exaggerated the position. It is true that in discussing this Bill the question of direct state control was dealt with, and the question of electing the majority of the shareholders was discussed. These are, it is true, questions of principle which have been raised, but whatever the questions of principle may be, the position, as I have already explained, is that in practice it makes very little difference. I very clearly explained my views in my reply to the second reading debate, and I said that there was something to be said for both sides. There is something to be said for direct state control and also for the present system where the representatives of private shareholders are in the majority on the directorate. But I said that I preferred the second system. I prefer a Board with at any rate theoretical independence, because it means that such a board will be able to advise us better than a board which is purely a government body. I think it is more in the interests of the State to have advice from a theoretical independent body than it is to have advice from a body which is purely a State department. I therefore prefer the system as confirmed in this Bill. I also admitted that a certain amount of danger was involved. There is the danger that the members who are elected by the private shareholders will outvote the representatives of the State, but I referred, and I refer again, to the lines of defence which we have against this danger. In the first place I mentioned that the State did not only nominate three ordinary directors, but also the two persons who occupy the key positions, namely the Governor and the Deputy Governor of the Bank. In the second place the position is exactly as the hon. member for Vasco (Mr. Mushet) put it and exactly as the hon. member for Ceres (Dr. Stals) put it in his second reading speech. The hon. member for George had no right to attack the hon. member for Vasco, because the latter was quite correct in saying that as far as the practical side was concerned, it is the State which controls our monetary policy. The hon. member for Ceres said in his second reading speech that no central bank would maintain a policy in conflict with the monetary policy of the State. In saying that, he practically replied to the hon. member for George. I want to repeat that the hon. member for Vasco was quite correct when he said that in practice the State has full control of our monetary policy. I cannot imagine that any central bank would want to maintain a policy which is in conflict with the monetary policy laid down by the State. The central bank will help the State; it will advise the State, but the central bank will ultimately carry out the policy of the State. That has also been proved in the 24 years of the history of our own central bank. The hon. member for George referred to 1932. Has it ever been alleged, however, that the Reserve Bank did not in 1932 act in the spirit of the then Government’s policy? If the hon. member criticises what happened at that time he is criticising not the Reserve Bank but the then Government. Precisely the same thing would have happened if the whole directorate had at that time been nominated by the State. The fact that the State did not at that time nominate all the directors of the Reserve Bank made no difference in the circumstances. In the second place therefore we have this line of defence that ultimately the State lays down the monetary policy of the country, and the Reserve Bank cannot maintain a policy in conflict with that. There is therefore not the slightest danger that private interests will control the bank, as the hon. member for George fears. But then we still have a third line of defence, and that is contained in the Act of 1933. Those provisions of the Act of 1933 make it absolutely clear that if the Reserve Bank were to attempt to maintain a policy in conflict with the monetary policy of the State, the State could act. The hon. member for Ceres says it would only be an emergency measure, but in the light of his own statement in his second reading speech, it would indeed be a crisis if the Reserve Bank attempted to act in conflict with the monetary policy of the State.

Lack of co-operation between the Treasury and the Reserve Bank ruins everything.

“Lack of co-operation ruins everything.” In other words the hon. member is afraid that the Reserve Bank will not act in the spirit of the monetary policy of the State. If that were to happen the Treasury would have full power in its own hands under the Act of 1933.

Would it also have power to change the composition of the Board?

Even that. Has the hon. member read the third Sub-section of Section 9 of that Act? There it is stated that the Government may by regulation suspend any portion of any Act in connection with banking. The Government may suspend any portion of any Act, also in so far as the election of the directorate by the shareholders is concerned. The Government even has that power.

Are you sure?

We can suspend any portion of any Act. Now I want to take exception to what the hon. member said, namely, that I apparently doubted whether this principle was sound. I explained my position during the course of the second reading debate. I explained that although a matter of principle was involved, I thought that in practice it would not make much difference whether the Government nominated the majority of the directors or not. I said that as far as I was concerned, it would be better if the Government did not nominate the majority. But in order to meet my hon. friend I said that I was prepared to consider an amendment. It is therefore very unreasonable on the part of my hon. friend to try and make political capital out of it now. After having adopted this attitude he cannot really expect us in the future to go out of our way to meet him. It is not a matter of doubting the principle. In practice there will be very little difference between these two things because we have full power of control under the present system, and today we have the benefit of advice from an independent body which is not a State department. For that reason I did my best to help the hon. member, but he must not say that I doubt the principle. The hon. member for Ceres again raised the question of clearing facilities. I have already referred to that and I have not much to add to my previous remarks. The position is that the Reserve Bank gives facilities to the commercial banks in connection with clearance. But when the commercial banks mutually establish and maintain a clearing house, and as a result thereof assume mutual obligations, the Reserve Bank cannot determine who shall be admitted to such an association. If the Reserve Bank has to accept the responsibility of determining on its own who shall become members, the Reserve Bank would also have to assume the responsibility for any resultant loss which the bank may suffer. I know of no central bank where such compulsion is brought to bear on an association. The central bank, on the other hand, has a good deal of influence on the commercial banks. The central banks can do a good deal to assist a new bank as far as clearing facilities are concerned, and the Reserve Bank in our country has already proved that it can do a great deal, and is prepared to do a great deal to assist. But we cannot expect the Reserve Bank to go further than that. I think the hon. member forgets that the Reserve Bank already showed its goodwill towards the cause which he has at heart, and since the Reserve Bank has a measure of influence, although it cannot exercise compulsion, I think the hon. member can safely leave the matter in their hands.

†Now I want to refer briefly to some of the points made by my hon. friends in that part of the House. It seems to me that there were two points that were chiefly emphasised. It was rather difficult sometimes to know what they were getting at, but one point by the hon. member for South Rand (Mr. Christie) was that no provision is made in this Bill for the Reserve Bank being the sole buyer and seller of gold. That is correct. In Section 8(g) we say that the Reserve Bank may buy, sell or deal in precious metals, but the hon. member went further and said: Yes, but there was provision for that in the previous Bill. There my hon. friend was wrong. Those words which I have just read …

That was an interjection by the hon. member for Vasco (Mr. Mushet).

No, the hon. member pointed out that there was that provision. The legal position in this law will be the same as in the previous law. Since 1920 it has been a power, but not a monopoly. Since 1926 the Reserve Bank has had an agreement with the Chamber of Mines under which it has been the sole buyer of all the gold produced by the large mines—not the small mines—and since 1939, under the regulation framed in the first instance under the Act of 1933, the Reserve Bank has had the sole right to acquire all gold produced in South Africa. Since then the Reserve Bank has had that power. The position, therefore is exactly as it was before. Now the other point which my hon. friend emphasised was that in this Bill we have not gone the whole hog. Well, we heard a good deal about the power of banks and the wickedness of bankers, but I do not feel called upon to go into that. I am not yet clear what my hon. friends want. This is a Reserve Bank Bill. Now one would have thought that what they mean is that we should have a Reserve Bank as a State institution presumably alongside the private banks.

No, not alongside the private banks.

Oh, I see. What my hon. friends want is not merely a State central bank alongside the private banks but a State Bank which will eliminate the private banks.

Yes, we want nationalisation of banking.

They do not merely want the State to control the issue of credit through the Reserve Bank but they want the State to be the sole issuer of credit.

Do you mean you have caught us at last?

I find it somewhat difficult because in Another Place an hon. senator who belongs to the same party, asked for a State Central Bank but for the private banks to continue to exist. That is why I have difficulty in following my friends.

Oh, you must forget that ancient House.

Yes, I see that in this House we are at least twenty years ahead of what may be said in Another Place. Well, I’m afraid my hon. friends and myself must just agree to differ. I agree that the State through the Reserve Bank should be able to control the issue of credit, and we have that power, but I do not believe that the issue of credit, the sole issue of credit, through what would be a State department under complete Government control, would be right or a safe thing, and on that I think my friends and I must agree to differ. I wonder sometimes whether they themselves, in a position of responsibility would be willing to carry out that policy. We have seen what has happened in Australia and what has happened in New Zealand. There are still commercial banks both in Australia and New Zealand. True, in those countries the State has gone further to control the issue of credit.

There is still a Nazi system in Germany.

Yes, but there is a Labour Government in the countries I have mentioned. Just one or two more points. The hon. member for Hillbrow (Dr. Friedman) says that the object of this Bill is to get back to the Gold Standard.

No, I said it provides for it.

It is perfectly true that this Bill creates the machinery for the return to the Gold Standard if and when that is the appropriate course. If that is what my hon. friend meant to say then I needn’t say any more about it. I have made it clear on two previous occasions that while one sub-clause 11 (1) by itself would put us back on the Gold Standard, as soon as this Bill becomes law, the following sub-clause empowers us to provide for the continuance of the present position and that is what will take place. Then the hon. member for Pinetown (Mr. Marwick) asked a few questions. He referred to the fact that Clause 3 (2) now only provides that the Governor shall be a person of tested banking experience. It is true that under the old law the Governor and the Deputy-Governor had to be such. In the old law we followed the practice of older countries. In the meantime several countries have changed their laws only requiring the Governor to be a man of tested banking experience. I do not say that we need tie ourselves in regard to the Deputy-Governor; he can come in and acquire the necessary knowledge, but I do want to make it perfectly clear that there is no intention to isolate ourselves from the commercial banks. My hon. friend has been apparently somewhat alarmed by the statement that no person shall be appointed Governor or Deputy-Governor if he has any interest in a commercial bank. Well, that has not prevented us from appointing Mr. Jorissen or Mr. Postmus, and it will not prevent us from making similar appointments if it is in the interests of the Reserve Bank.

Will that apply to Mr. John Martin?

I am not aware of all the financial interests of the gentleman to whom the hon. member refers. And then the hon. member referred to the question of the possibility of an increase of the capital of the Bank. There again we are taking over the provisions of the existing law. As far as the ratio is concerned it is true that in the law of 1920 the ratio was 40 per cent., but for some years now the ratio has been 30 per cent. We do not propose to alter that. We consider that as a safe ratio, and having regard as to what has been said in the previous debate on this Bill ás to the necessity for flexibility in the future, I personally would not favour putting the ratio higher than 30 per cent. which in any case seems to provide an adequate margin of safety.

Ayes—68 :

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Barlow, A. G.

Bekker, H. J.

Bell, R. E.

Bosman, J. C.

Bowen, R. W.

Bowker, T. B.

Butters, W. R.

Carinus, J. G.

Christopher, R. M.

Clark, C. W.

Connan, J. M.

Conradie, J. M.

Davis, A.

De Kock, P. H.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Du Toit, A. C.

Du Toit, R. J.

Eksteen, H. O.

Faure, J. C.

Fawcett, R. M.

Friedman, B.

Gluckman, H.

Gray, T. P.

Hare, W. D.

Hayward, G. N.

Hemming, G. K.

Henny, G. E. J.

Higgerty, J. W.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Maré, F. J.

Morris, J. W. H.

Mushet, J. W.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Russell, J. H.

Shearer, V. L.

Sonnenberg, M.

Steytler, L. J.

Stratford, J. R. F.

Sturrock, F. C.

Sullivan, J. R.

Sutter, G. J.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Williams,’ H. J.

Wolmarans, J. B.

Motion put and the House divided:

Tellers: G. A. Friend and W. B. Humphreys.

Noes—23 :

Bekker, G. F. H.

Boltman, F. H.

Bremer, K.

Brink, W. D.

Cilliers, H. J.

Erasmus, H. S.

Klopper, H. J.

Le Roux, J. N.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Stals, A. J.

Strauss, E. R.

Strydom, G. H. F.

Swart, C. R.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Tellers: P. O. Sauer and J. J. Serfontein.

Motion accordingly agreed to.

Bill read a third time.

I would certainly be neglecting my duty if I did not protest strongly against this increased estate duty which the Minister of Finance proposes. There are two matters especially which in my opinion it is necessary to bring to the notice of the Minister. The first is that this duty will bear very heavily on estates where there is more than one heir, and the second is that this duty will bear heavily especially on the farming community. An estate of £18,000 can well afford to pay the increased duty which is now being imposed by the Minister of Finance, if there is only one heir. But if, for example, there are eight heirs, it will be very difficulty for them to pay the increased duty. We still find many families amongst the farming community where there are seven or eight children, or even more heirs. The father works very hard together with his sons in order to improve the farm, so that he will be able to leave something for his children to inherit. There is an expression: “Easy come, easy go.” Someone remarked that it was money from home. That is not always the case. Very often the position is that the father and his sons lived economically and did everything in their power on the farm in order to ensure that there may be something for the sons to inherit in the future. We now find that the Minister is reducing the figure on which estate duty becomes payable from £15,000 to £10,000. In these abnormal times, having regard to the increase in the price of land and the price of cattle, the value of the farmer’s assets has been increased proportionately. A farm which was formerly worth £5,000 together with all the assets, may now be worth £10,000. If we divide that farm amongst eight heirs, what will each heir get? The Minister has increased the transfer dues. The farm will probably have to be divided amongst the children, and they would still have to pay transfer dues. The Minister makes no differentiation whether there be one heir or six or eight heirs. This duty will therefore bear very heavily on the farmers, because it is the farmers who have large families. The Minister of Finance should not put this tax through the House in its present form. Since so many pleas have already been made for a concession to the small man, I want to ask him to make a concession in the case of smaller estates; and that he should follow the example of the Minister of Native Affairs. The native representatives made persistent representations, and the Minister of Native Affairs said that their persistent pleas had softened his heart, and he would therefore bring about certain minor alterations. We have done our best to put our case as strongly as we could, and to point out that in these days of war when everything is very expensive, it is not the rich man who leaves an estate of £15,000 or £20,000. The price of land has risen enormously. A farm which formerly fetched £5 per morgen will now probably be valued at £9 or £10 per morgen. The value of the estate has been doubled, but the productivity has not doubled. In many cases it actually decreased. I feel that this is an unfair duty, and if the Minister does not see his way clear to reduce the estate duty, let us then say that the duty will remain at its present level where there is only one heir, but that it will be reduced where there are two heirs, and thereafter progressively reduced until it disappears completely in the case of large families. That is a reasonable request, and it ought to be easy for the Minister to bring about this small alteration at the eleventh hour. I do not want to detain the House unduly, because we would all rather go home, but I want to make a serious appeal to the Minister to bring about this small alteration. If there is only one heir, the duty could perhaps remain as it is, but if there is more than one heir the duty should be reduced. We could meet the people in this way. Another point is this. All these forms of taxation where no differentiation is made in favour of large families, undoubtedly have a very detrimental effect. Many of our young people who are on the point of marrying and having families, are put off by this duty. If we go on with this type of duty it will undoubtedly have a restraining influence on those people who want to have families. This is a young country with a small European population, and we must do everything in our power to augment the European population as much as possible. But if we impose taxes of this nature, we make the position impossible for the young man who wants to have a family. We are practically imposing birth restrictions on our people, something which we should not do in our country. We should rather pay an allowance in respect of large families, instead of keeping families small. I think this type of duty will operate very unfairly and I want to make an appeal to the Minister of Finance once again, if he cannot abolish this increased duty, to differentiate between an estate where there is only one heir and an estate where there are two or more heirs, so that the duty will become progressively smaller according to the number of heirs.

This is one of the measures which must give our friends on the other side many a headache. When the hon. member who has just spoken, said that he did not intend keeping the House very long, they shouted “Hear, hear!” We can well understand that, for they have a difficult time when we discuss taxation measures of this nature. I know that it is of little use trying to persuade the Minister of Finance not to go on with this measure. He is determined to go on with this taxation, and we know that once he gets it into his head to impose a tax, he goes on with it until he bleeds the people white in that respect. The hon. member for Swellendam has shown us today that whenever the Minister of Finance gets stuck, he falls back on taxing the wine industry. I can well remember the time when the minister brought the taxation limit down to £15,000. That used to be higher.

No, we did change the scale but not the limit.

In any case, the fixed limit used to be £15,000. The Minister of Finance now comes along and brings that down to £10,000. Experience has furthermore taught us that once such a tax has been imposed, it will not easily be abolished again. If the Minister of Finance would be prepared to lay down that this is a war-time measure, we would be satisfied to some extent. We feel convinced, however, that once the tax has been increased, it will remain increased, and it will not surprise us if, should this war continue much longer, the Minister will bring down the rebate still further. The unfairness of this taxation is this, that when a man has toiled in order to leave his people in such a position that they will not slide back again but will be able to live comfortably after his death, then the Minister comes along and burdens those people with more taxation. Take the case of a person with an estate of £12,000. He may have had eight, ten or twelve children. How much does each child receive out of that estate? The Government, however, comes along and takes its share all the same. On such an estate the duty will amount to £135. When an estate of £12,000 is divided among eight or ten children, it does not mean so much.

When the duty is spread over the heirs, it also does not mean so much.

I think that this is one of the most unfair taxes the Minister could have devised. He has hit left and right and taxed everything he could lay his hands on, but this is the most unfair taxation the Minister could have thought of. We find that a person works hard so that his wife and children may live after he has gone in the same manner as when he was still able to look after them, but we now find that the Minister increases this taxation, which will press hard on those people. It is a most unfortunate taxation. Yesterday it was shown here that owing to the inflation and the higher prices for land, an estate of £12,000 is not a big estate. It may even still go higher, although the actual value of that estate in normal times would have been only about half of that amount. Owing to the higher valuations the estate will have to pay this tax. I do not want to keep the House any longer, but I really feel that I would have failed in my duty if I had not raised my voice against this unfair taxation imposed by the Minister.

I would like to say a few words on this increased death duty. I, as a young farmer, feel that it is an unfair and unreasonable tax. The farmer’s assets do not consist of cash in the bank. The man who has £20,000 in the bank, has £20,000 whether it is a time of prosperity or of depression. In the case of a farmer it is a different matter, as I wish to illustrate by quoting an example from my own district. A thousand morgen of land is bought in time of depression at £5,000. The person who bought it, works on the ground, he erects fences; constructs dams; builds stores, and he improves it. It becomes a beautifully fenced, well planted and cultivated farm with dwelling house and stores. Now it is not sold at £5,000 but perhaps at £15,000. It is through the hard work of the farmer that the farm has become an asset to the district. Then after six or seven years the difficult times come and the value of the same farm may during the depression be only £4,000. That is why I feel that it is unfair to impose this tax on the farmer. When times are good, then the farmer is worth something; when times are bad, he is worth nothing. A few years ago we received 4s. 3d. per bag for maize, now we get 16s. We received 14s. for a bag of wheat, and now we receive £1 16s. Now take the 1,000 morgen of land at £15,000. The farmer can keep 300 head of cattle on it. In a time of depression those cattle were not worth more than £1,800. Now they are worth £20 a piece, or £6,000. That makes a big difference. That means that in good times that man is worth £22,000, while in times of depression he is only worth £7,000. It is our custom, as farmers, preferably not to sell a cultivated farm, but to leave it to our heirs. Now take a family of five children, which is not a big family. That means that if the farm of 1,000 morgen is divided amongst them, each child receives 200 morgen. The one child gets the farm building and the other children get the ground without buildings. Each then gets 200 morgen and 60 head of cattle. The death duty on that estate will be £1,250. The land is subdivided and that means that approximately a further £600 in transfer duties will have to be paid. That means that the heir who inherits 200 morgen and 60 head of cattle, has immediately to pay £390 in this taxation, although he receives a piece of land with nothing on it. I am not talking about the man who has the ready cash. To him it will not be so difficult, for the children get the money. In the case of the child who receives a bare piece of land and 60 head of cattle, that heir will have to obtain a bond in order to pay the death duties and cover his other expenses. He has no house and no paddocks there and by the time he has all those things there so that he can commence farming operations, he will be practically a poor white and can no longer make a living. In the past I have said already that I do not want to dictate to the Minister what he should do, but I want to ask him politely to consider this matter. Will it not be possible to alter the law in such a way that the position of the heir may be taken into consideration. The estate may be what it is, but tax the heir on the cash amount he inherits. If the child receives £6,000 or £10,000 it should be taxed on that amount. But as the taxation is now, it will mean that a man works hard to make his land what it is and then taxes have to be paid on it. It may be the case of two adjoining farms. On the one farm the farmer sits at home all day, twiddling his thumbs and doing nothing to his land. That land will afterwards have very little value. The other farmer may slave and work all day. He does not run about and he saves his money because he wants to make provision for his children after his death. That is the man who will have to bear this tax whereas the other man pays nothing at all. The same is happening in connection with income tax. Two farmers, for instance, possess the same amount of land. The one works hard and has to pay a lot whereas the other pays nothing at all. Farming is a precarious undertaking. One year the farmer is well-off and a few years later he is poor again. For that reason I want to ask the Minister to take these few points I have raised into serious consideration and to see whether he cannot adopt measures to tax the heir and not the estate. Tax the child inheriting much money, but give some relief where the estate has to be divided among a large number of children.

The hon. member for George (Mr. Werth) in his speech in this debate blundered slightly in certain respects. In the first instance, he described the introduction of the Bill at this stage as a departure from sound Parliamentary practice. He adopted the old attitude that grievances should first be remedied before Parliament is asked to make money available, and from that he drew the inference that the taxation Bills should only come before the House after the majority of the votes have been disposed of. It is difficult to reconcile the argument of my hon. friend with that of the hon. member for Ceres (Dr. Stals). He held it against me that I introduced the taxation proposals at such a late date. The hon. member for George wanted them even later. The actual position is this, that the hon. member for George is confusing two things—on the one hand the supply of money and on the other hand taxation. The sound principle to which he referred that grievances should first be considered before the supply of money is asked for, before the Appropriation Bill is introduced, is not being disturbed by us. But the supply of money and taxation proposals are two separate things. You might impose taxes where no additional amount is asked for, but because the existing sources of taxation have declined. I think my hon. friend—he now realises it—apparently confused these two things. The supply of money only comes after the taxation committee has done its work, but taxation proposals may be considered at any time. That is why we find every year in this House that the Committee of Supply and the Committee of Ways and Means sit practically at the same time. The Committee of Ways and Means is created while the Committee of Supply is still engaged on its work. The Committee of Ways and Means can be set in motion before the Committee of Supply has started. There is nothing to prevent that. It represents two complementary parts of the same procedure. It is not necessary that the one should follow the other. The hon. member also referred to what was said by the Clerk of this House in a valuable document which he published. I want to draw attention to this quotation from that document—

He stated what usually happened, but he did not say it was sound Parliamentary practice. I also want to refer to a ruling which was given by Mr. Speaker in 1922—

I think my hon. friend will realise that in that respect he was mistaken. That was his first blunder. The second was when he suggested in all seriousness that the Government should have allowed the hon. member for Fauresmith (Dr. Dönges) to introduce a taxation Bill. Surely he knows by this time—and I thought the hon. member for Fauresmith would have known it—that only a Minister can come before the House with taxation proposals.

You can move them, but he can frame them.

I welcome suggestions from the hon. member for Fauresmith and from any other person in connection with that question. I said so at the time. But the proposal that the hon. member should be allowed to introduce a taxation Bill, before we know what it contains; that he should be accorded facilities to go on—well, that is against the rules of the House, and my hon. friend should have known that. But the real objection to the taxation portion of this Bill is, of course, in connection with the reduction of the limit. The limit is being lowered from £15,000 to £10,000. Let me say in parenthesis—and that will reassure my hon. friends to a certain extent—that where a person is married in community of property, the limit is of course not the amount which is mentioned here but twice that amount. In an estate where husband and wife are married in community of property, and one of the spouses died, the limit is not £10,000 but £20,000. My hon. friends overlooked that point. It is stated that the limit is being lowered and that that reduction will bear heavily on the people. My hon. friends on the other side always plead for the poor man. They describe every estate up to £20,000 as the estate of a poor man. I am sometimes inclined to put the question in this House, who is really the poor man? The majority of members in this House will answer that question on these lines, that the poor man is the man who has not got more money than they have. Anyone who is richer than they are is a rich man; anyone who has just as much or less than they have is a poor man! For those people they will fight! What is really the objection to this reduction of the limit? My hon. friends say that we can keep the limit at £15,000 and let the scale go higher than 6s. 8d. But what my hon. friends forget is that an increase in the scale will affect a very small number of people. The lowering of the limit will, however, exclude a fairly large number of people from the duty. The number of estates between £10,000 and £15,000 in a typical year is aproximately 200. The number of estates above £15,000 is something like 300. Two-thirds of the estates will therefore be excluded if we do not lower the limit, and in addition to that there is the fact that the reduction of the limit or an increase of the rebate from £300 to £675 will result in all the other estates paying £375 less. The loss as the result of increasing the rebate would therefore be considerable, while in the same year there will be only thirteen estates above £110,000. That is also the reply to the argument of the hon. member for Ceres (Dr. Stals) that we should take more from the bigger estates and less from the smaller estates. The argument was advanced that South Africa is a young developing country, that South Africa is a young agricultural country, and that we should not bring the limit down to such a low level. But what is the position in other countries which are also young developing countries just like South Africa? In New Zealand, for example, the estate duty begins at £200; in Australia it begins at £1,000.

Have they got succession duties there too?

Yes, they also have succession duties—higher than our succession duties. In Australia the duty starts at £1,000, and I think at £2,000 where the wife is the heir. In South Africa the limit is therefore extraordinarily low, especially when it is borne in mind that where the marriage is in community of property, the limit is practically £20,000. It means this. On an estate of £12,000 an estate duty of £132 will be payable. On an estate of £15,000, a duty of £375 will be payable. Is that really so unreasonable? Is that so terrible? No, I think where the children inherit as much as that they ought to be prepared to hand over a portion to the State. They cannot expect to start where their father left off. They ought to be prepared to earn something before they start on the notch which he left off. We have heard a great deal about the increased price of land. Yes, the price of land has risen, but my hon. friends must remember that increased land prices are also in the interests of the owners—at any rate, in the temporary interests of the owners.

But they are not selling.

That may be so, but they have that asset. They have the advantage of that asset. The hon. member for Winburg (Mr. Swart) made a speech which was somewhat more constructive. He dealt with two points especially. He raised the point that in his opinion our system was wrong in that the same amount of estate duty is payable in the case of an estate where ten children are the heirs, as in the case of an estate where there is only one heir. The hon. member for Lichtenburg (Mr. Ludick) also raised this point. That is true, of course, as far as estate duty is concerned, but our death duties are of a twofold nature. We have estate duties and succession duties. There is a rebate in the succession duties. The degree of relationship is also taken into account in assessing succession duties. My hon. friend may say that the principle of succession duties should be further extended, and that we should take more by way of succession duties and less by way of estate duties. I admit that certain arguments can be advanced in support of that contention, but we have the existing system in terms of which estate duty is the most important part of our death duties, and that system is also the system which applies in other countries. It would not be easy to do away with that principle altogether, and I cannot therefore hold out any prospect that it will be done at this stage, at any rate. My hon. friend also referred to the position which arose as a result of the judgment of the court in the case of Estate Cohen versus Commissioner of Inland Revenue. That was a case where the marriage was in community of property and where a donation had been made within two years of the death of one of the spouses; according to the judgment of the court the full amount of that donation was added to the amount of the estate. My hon. friend thought that in such a cases where the marriage was in community of property the addition to the estate should not have been the full amount of the donation. I must say that I have a good deal of sympathy with my hon. friend’s argument. I am going into the matter, and if at all possible, I shall move an amendment in the Committee stage.

I think you will admit that that was the practice of the Department of Inland Revenue.

Yes, the practice of the Department has always been to add one-half. This judgment was then given—not at the request of the Department but on another issue—from which it appeared that in terms of the letter of the law the whole amount had to be added. I am prepared to consider the possibility of bringing about an alteration.

Motion put and the House divided:

Ayes—72.

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Barlow, A. G.

Bekker, H. J.

Bell, R. E.

Bosman, J. C.

Bosman, L. P.

Bowen, R. W.

Bowker, T. B.

Burnside, D. C.

Butters, W. R.

Carinus, J. G.

Cilliers, H. J.

Clark, C. W.

Connan, J. M.

Davis, A.

De Kock, P. H.

Derbyshire, J. G.

De Wet, H. C.

De Wet, P. J.

Dolley, G.

Du Toit, A. C.

Du Toit, R. J.

Eksteen, H. O.

Fawcett, R. M.

Fourie, J. P.

Friedman, B.

Gluckman. H.

Gray, T. P.

Hayward, G. N.

Hemming, G. K.

Henny, G. E. J.

Higgerty, J. W.

Hofmeyr, J. H.

Hopf, F.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Latimer, A.

Madeley, W. B.

Maré, F. J.

Miles-Cadman, C. F.

Morris, J. W. H.

Mushet, J. W.

Payn, A. O. B.

Payne, A. C.

Pocock, P. V.

Prinsloo, W. B. J.

Raubenheimer, L. J.

Robertson, R. B.

Russell, J. H.

Sonnenberg, M.

Stallard. C. F.

Steytler, L. J.

Sturrock, F. C.

Sullivan, J. R.

Tighy, S. J.

Tothill, H. A.

Ueckermann, K.

Van der Byl, P.

Van der Merwe, H.

Van Niekerk, H. J. L.

Waring F. W.

Warren, C. M.

Waterson, S. F.

Williams, H. J.

Tellers: G. A. Friend and W. B. Humphreys.

Noes—23.

Bekker, G. F. H.

Boltman, F. H.

Bremer, K.

Brink, W. D.

Erasmus, H. S.

Klopper, H. J.

Le Roux, J. N.

Ludick, A. I.

Luttig, P. J. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Potgieter, J. E.

Stals, A. J.

Strauss, E. R.

Strydom, G. H. F.

Swart, C. R.

Vosloo, L. J.

Warren, S. E.

Werth, A. J.

Wessels, C. J. O.

Tellers: P. O. Sauer and J. J. Serfontein.

Motion accordingly agreed to.

Bill read a second time; House to go into Committee on the Bill on 4th May.

I move—

I regard it as a very great privilege indeed that I have been given ap opportunity of moving the second reading of this Bill. I regard it so because it is at all events in part a recognition and a discharge of our obligations to our forces. The Rt. Hon. the Prime Minister announced in this House some time ago that he wanted to place before the House that in his opinion there were three priorities; firstly, winning the war; secondly, the soldiers’ charter and thirdly, social security. He put those three items in that order not because, I believe, he thought that they were so in order of importance, but merely because of the chronological effect, because in my opinion each is dependent upon the other. If we do not win the war it is no use our considering ways and means of protecting the interests of the returned soldiers. There will be no opportunity. If, on the other hand, we win the war and do not protect the returned soldiers, we would be failing in our duty, a duty which we should be only too happy to shoulder; and if we do not bring about complete social security it is no use having either of the preceding things; it is no use at all because we might win the war and we may pass a law providing as best we can for returned soldiers but they will both be rendered completely nugatory if we do not have complete social security.

We shall have lost the peace.

As my hon. friend says we shall have lost the peace, the most important of all, and the returned soldiers themselves will go down into the chasm opened up by the lack of social security. So I think that the House will agree I am right in estimating the order of those items as being merely the chrono-logicial order and not the actual order of importance. The Prime Minister quite rightly stressed this to his colleagues; particularly did he stress the necessity of this country providing completely for its returned soldiers of every description. He did that, I believe—certainly I hold the view—because we owe a debt of gratitude to our forces that it will be very difficult indeed for us to repay. What do we owe to our forces? It will be well for us to study that for a short time in order, perhaps, to refresh our memories that may require refreshing and thus increase our determination to play the game. Well, Sir, first of all, to my mind, we owe to our forces of every description our national honour. They saved us from the possible reproach that might have been hurled at us that we in South Africa as a nation did not play our part and take our share in resisting the onrush of Nazism that threatened to overwhelm the world. That is the first thing that we owe to our soldiers. Secondly—and that is not too often fully realised— they saved us from attack. A great many people have been viewing this war from the point of view of its being in distant countries, and that we were always well out of it geographically speaking. We were not always well out of it. Had that little handful of South African troops not ripped through Abyssinia as they did, there can be no question that that would have been a very fine jumping off point for Mussolini and his hordes en route to South Africa at a time when we were in such a condition that we would have had no hope of resisting the well armed forces and the number of those forces that Mussolini would have been able to hurl against us. Thus they saved us from attack, and our gratitude for that must be very great indeed. And this, if no other reason, should urge our regard for them. They made us proud of them. Again I ask you to turn your mind to Abyssinia and see how they dealt with the overwhelming forces in a terrain that was the most difficult in the world to work through, from the military point of view at all events; not so well-armed because it must be remembered that we were caught napping from the point of view of supply of munitions to our defence force, small as that defence force was. We were in no shape to conduct a war. But the grit, the courage, and the pertinacity of our man power, small as it was in Abyssinia, carried us through that terrible time. And, Sir, for that alone we can be proud of them. Again mentally accompanying me further north than Abyssinian and witness these gallant fellows in the desert. When they stood towards the evening of one particular day in that sandy desert, practically unarmed, all their munitions gone, with those flaming steel monsters that the Germans were hurling against them, they stood up to that—our men, South Africa’s representatives in that war. Great in victory, greater in temporary defeat, and never defeated. Therefore, Sir, I claim they made us proud of them. It is not out of place on an occasion such as this, when I am urging the House to re-shape itself in the direction of its consideration of what we owe to our fellows, to mention our airmen, and it is not out of place to mention the genesis of our air force. Again it will be remembered that we started this war very ill-equipped from the point of view of aeroplanes, battle aeroplanes and the personnel to man them. And I want here and now to pay a tribute to the South African Airways which formed the nucleus of our attacking force which ultimately developed into what it was and what it is, which has earned the plaudits of all our allies and has earned at least the respect of our enemies. And one other service to which I want to pay tribute—and I am sure the House joins me in paying this tribute—is to our “little ships.” We took them from the city and the plough, as the song says, and we put them on trawlers; we armed those trawlers as well as we could both with guns and with a certain amount of armour—ill-equipped indeed to fight a battle. But read the accounts of what those little ships did; read the accounts of the evacuation of Tobruk, amongst other things; read how they painted the name of South Africa and painted it in very vivid colours indeed. I ask this House to pay as high a tribute as our language enables us to do to our Ittle ships.

And the merchant navy.

The merchant navy is the accompaniment thereof. I also pay my tribute to them. The merchant navy is not in any sense a fighting organisation. I understand that upon every merchant vessel which came out—they are not built to resist gunfire—there were at the most two guns, one fore and the other aft. These fellows had to face death with every voyage, and they went to the various parts of the world carrying produce very much needed by us and by our allies; and again a tribute is due to another portion of the navy. With these feelings and thoughts in our minds we are introducing this Bill. The Bill itself is designed, first of all, to place back in their original employment, those who left their employment to go to the front. Secondly it is designed to place those who were never in employment or were not in employment at the time into employment; and other matters of detail associated therewith. The original Bill itself was published some months ago. It was examined and discussed and conferred upon by and with all sorts of organisations— military, civil, employers, trade unions; and was as a result brought into this House. It was thought desirable that the Bill even as it stood then, after all that vetting, should be subjected to another scrutiny, a closer scrutiny by a Select Committee of this House. A Select Committee of the House sat, considered it in all its bearings, and I want to thank the members of that Commitee for the careful way in which they scrutinised that Bill and the result of that scrutiny. The result is the Bill that I am moving this afternoon. The Bill does not only provide for employment, and after all employment is the main thing, provided that employment is suitable and sufficiently well-paid; but it provides hot only for the employment of returned soldiers, but also for war workers. And I have no hesitation in bracketing the two together. The soldiers could not fight without munitions. And let me say here and now that the vast proportion of those who were kept behind— and I say kept behind advisedly, employed in what we are pleased to call key positions in the manufacture of shells and guns and the various appurtenances of war—the vast majority of them were kept here actually by force. In literally hundreds of cases I have myself been urged, implored, especially by men in my own industry, to be allowed to go to the front. We kept them back. But even if we had not kept them back, even if they had stayed behind as a result of a desire so to do, the fact remains that they were performing operations in this country of such a character that they were of vital import to the safety and success of our soldiers in the North. In addition to that I want to pay a tribute, not only to these workers as individuals, but in the mass, who helped us to keep things going, and I want to pay a tribute to the trade unions. Be it not forgotten what the trade unions have done in this war. They surrendered numerous privileges, numerous claims to recognition which they had fought for, and fought for for many years and gained only as the result of considerable suffering to themselves and their members. And they didn’t have to be urged to surrender these privileges. They did it spontaneously as a patriotic effort, as part of their contribution to South Africa’s war effort. Let us appraise their effort at its true value and give them every praise and do not let us forget it when it comes to the restoration of these privileges—do not let us do it in a carping spirit—let us do it freely and generously in the way they surrendered these privileges. To all these I pay a tribute and that is why we have in drafting this Bill and the Select Committee has appreciated that—that is why we have associated the war workers with the soldiers as having a prior claim to employment over other sections. The Bill provides for that. As I said it was the subject of a great deal of examination. It is a most remarkable thing—most of the Bills which I have had the honour to introduce in this House, have been the subject of the closest scrutiny, both before and during the passage of these measures through this House—perhaps more so than has been the case in regard to any other Bill I have ever experienced in my years of Parliamentary life. I simply draw attention to this. It is something that the House may have some regard for, so that when the day comes when they will be gathering round my coffin, they will remember that they gave me a deuce of a time of it here.

Did you resign from that Committee?

No, I thought there were better men to take the Chair, that was all. While I am on this question of scrutiny and conferences on this Bill, I may mention the latest conference I have had. This is of course since the Select Committee has reported. Hon. members know that the Moths and the B.E.S.L. have been having a combined conference which has lasted several days and there were several things which they discussed, among them this Bill, and then they came to see me, and as a result of a discussion they had with me I can assure the House that they are perfectly satisfied with the Bill as it stands, and I hope the House will take that into due consideration when it is considering the Bill not only in principle but in all it details. At one time some enterprising paper came out with a statement that this Bill—that is the original Bill—was the soldiers’ charter. It never was, it never purported to be, it never intended to be. It is only a page of the big book. You had another page, several pages, outlined to you in Committee the other day by the Minister of Demobilisation and that part, perhaps not altogether in detail, but as a whole, has received the universal approbation of this country. Then the Minister of Lands has prepared lands as his contribution to the soldiers’ charter.

Oh, he is a fortune teller.

Oh no, the hon. member is a necromancer. Then the P.W.D. has prepared plans for incorporation in the general structure of development after the war. And in fact, they are already taking up numbers of our returned soldiers. The Minister of Finance indicated to this House in the form of legislation that in the Public Service opportunities were going to be created of absorbing a large number of returned soldiers. Here may I express my approval of the attitude of mind and the action that have been adopted by a good many employers. The Chamber of Industries, the Chamber of Commerce have indicated that they are determined to make this Bill a success. They have not objected to that power which it is proposed the Minister shall take of imposing on industry either in part or as a whole certain quotas of returned soldiers as part of their labour force. And I take it, I feel perfectly certain it is true that they are going to do their best to give effect to that portion of the Bill as well as to the general provisions of employment as required by the Bill. I have the assurance of the Chamber of Commerce and the Chamber of Industry that it will be so. I acknowledge it with gratitude and look forward with great pleasure and anticipation to the result. Well this does not purport to be a soldiers’ charter. It is only part; it only deals with the employment part of the returned soldiers’ conditions. To begin with it gives statutory form to the civil employment regulations which would of course lapse six months after the war is officially declared over. It would be interesting to let the House, especially the other side, into a secret. The war will not be officially over until the Government declares it so, but as from that date all our war regulations go by the board, even those in regard to re-employment of returned soldiers.

And the Walker Award.

Yes, it will certainly go but I hope we shall have built up such a body of public opinion that it will be a charter. It is worthy of consideration. Then the Bill has as its object the establishment of a Soldiers’ and Warworkers’ Employment Board which will be responsible for advising the Government on all matters arising out of the war. And one other important aspect is that it gives the Minister the power, on the advice of the Board and local committees to be instituted, to impose on industry, wherever necessary, a quota of returned soldiers. I think that is well. I am hoping that we shall never have to impose it. If reassurances go for anything we shall never have to do it, but we would be foolish indeed did we not take time by the forelock and anticipate the possibility of at all events some people not sufficiently realising their obligations to our soldiers after all they have done, and looking only at the profit-making side of their business, and deciding not to take returned soldiers, because it might cost them a little more. In that event the Minister in charge of the administration of this Bill will have the power so to do. There will be committees instituted of a local character, who will see to it that those who are in that locality, and even from other localities, if necessary, are filtered into industry in the best possible way without dislocating industry and causing unemployment. One thing stands out most emphatically, and I want to impress that on the House, that no soldier will be discharged from the military until he has a job that is suited for him, suitable to his capacity and requirements and suitable financially to him.

What about those discharged already?

They come under the same thing.

They cannot get a job.

That requires to be taken up at once.

Put your foot down.

That requires scotching at once. I must confess that at one time our control was rather lax and men returning from the front, irked at being kept in dispersal camps for any length of time. We had not got the Discovery of Work Organisation in operation properly.

Why move so late?

Let me finish.

Yes, finish your apology.

I make no apology and least of all to my hon. friend, but as a matter of fact, men in their anxiety to get away from the military, having done their fighting—and that was their object in joining the army—told the employment officers that they had jobs to go to.

They said so wrongly.

Yes, and they didn’t have jobs to go to. They just wanted to get away and do something. They wanted to get away from the dispersal depots. These men wanted te get back into the civilian ranks, they wanted to be free from miltary service again, and then some of them couldn’t get jobs, and the result was that they started walking about the streets and they blamed anybody but themselves for not having work. That accounts for the vast bulk of them. There are others we could not fit in and that brings me to another aspect.

Didn’t they apply afterwards for work?

Yes, and they get it. But after their discharge they are not on strength, but now we keep them until a job is found. We check up. If a man says: “I have a job to go to,” we ask what the job is and who his employer is, and only after that do we decide whether a man is to be discharged or not. The point is this, and I assert it with all my strength, that we are determined that no soldier will leave because we have made him leave, until he has a job suitable to his capacity and his needs. And here again I must pay a tribute to the trade unions. They have offered their services freely in the direction of helping to filter men into industries. Hon. members will recollect that owing to the shortage of skilled men we instituted what is known as the C.O.T.T. Scheme. That was a rush training of a comparatively primitive character. Well, it didn’t go far enough really, but it was undertaken in the hope that they would be able to continue and improve their training while in the army and pull their weight as partially skilled tradesmen. Many thousands of these have to be filtered into industry, and the committees which we propose to appoint under this Bill will be charged with that job; but they will not be able to do it satisfactory unless the trade unions are helping them. The trade unions have given me their assurance that they will do that to their full capacity, and under those circumstances I think this House should feel that it should have a little warm feeling for the trade unions who have come to the assistance of the country before and during the war and propose to do so after the war. I don’t know whether I need to go into the details of the Bill.

Oh, yes.

It is hardly necessary.

If they cannot read they should not be here.

I don’t think that it is necessary for me to go into the details of the Bill. I have it all here, but if I do, someone on the other side will accuse me of reading my speech. You will never have that opportunity again.

You only read your speeches when you are in trouble with the Cabinet.

I never read my speeches. I think I shall leave the consideration and the understanding of the details of the Bill to the intelligence of the House.

Good gracious.

My hon. friend is aghast at that. In view of the fact that the Bill has been before the House, in view of the fact that the Bill is the progeny of the House, in view of the fact that the House itself appointed a Select Committee, which after careful consideration redrafted the original Bill, and submitted this one, I do not think there is any need for me further to urge on the House the necessity for passing this Bill.

It was obvious to me and to every member of the House that the shock which the Minister got when he of all Ministers was charged with the introduction of this Bill nearly left him breathless. He devoted nearly half his spech to a description of how this honour was bestowed on him, how much it meant to him to introduce this Bill. He was so astounded that he said practically nothing with regard to the Bill, nor was he inclined to say anything. Not only was the Minister surprised that he had been called upon to introduce this Bill but other people were also surprised. What surprised me more than anything else was the fact that the Minister was so delighted with the singular task which had been entrusted to him, that he devoted a great portion of his speech to a misplaced war debate, which was certainly not calculated to create the right spirit. The spirit which it created was just as misplaced, in the opinion of many members on this side and also on the other side, as it was to entrust him with this Bill. But I do not want to judge him too harshly. Perhaps the fact that this Bill was entrusted to him is due to the Minister’s weak position in the Cabinet. A Cabinet is a wonderful thing, especially in the experience of the hon. Minister. Today one is in it and tomorrow one is out of it. It does not surprise me, therefore, that he availed himself of this opportunity to make this plea. It almost sounded like a swan song. The Minister does not know and we do not know whether he will still be in the Cabinet tomorrow, and perhaps he availed himself of this opportunity in an attempt to gain the sympathies of a section of the public whose sympathies he would not otherwise have gained. The Minister is in the Cabinet as a result of the war, and he knows that as soon as the war is over he will no longer be in the Cabinet.

What has that to do with the Bill.

If one reads the signs of the times as well as the indications given by his own party, it is very clear that they only suffer themselves on the Government side as at present constituted. So much so that when certain measures are proposed they drag themselves out of the House, and sometimes even over to the Opposition, because they do not want to vote for those measures for which they are expected to vote. As far as the Bill is concerned, I want to say at once that the Minister’s plea this afternoon and the fact that this Bill has to be introduced, are further indications to us of what we have been predicting for a long time and what we have always said, namely, that participation in a war solves no problems but creates problems. I remember very well that at the beginning of this war it was said by members on the other side, and perhaps also by the Minister, that we should take part in the war, because if we did not do so we would have no markets for our products; we would not be able to develop our industries; we would be left behind as far as development is concerned, and we would not be able to take part in the Peace Conference, etc., etc. That was the cry, that we should take part in the war in order to solve our problems. This afternoon we see that wars do not solve problems. I want to say frankly that although we cannot all be held responsible for the fact that these problems were created, the future nevertheless places a responsibility on each of us to solve those problems. Whether we were for or against the war, the future places on us not only the duty of finding a solution for the problems of the war but, if we do not solve these problems the conditions which will be the aftermath of the problems which have been created. Where legislation is introduced in such circumstances, legislation which seeks a solution, one expects it to be moved in a different spirit to that revealed by the Minister, a spirit which will create goodwill throughout the whole country. As one of our great poets said in connection with legislation: “Every nation has its laws exhorting good and prohibiting evil.” If we seek a solution of problems and introduce legislation we must remember, in the first place, that that legislation must aim at the creation of a sound and correct relationship between the various sections of the population. I am not so sure that what the Minister said contributed to the creation of goodwill amongst those who are in favour of the war and those who are against it. Let me tell the Minister that we were and still are against the war, but if the Minister wants to pilot any measure through this House, we expect him to make an effort to create the right spirit. We on this side are expected to bear the burden of taxation, to take the responsibility of war expenditure on our shoulders and to contribute to the solution of these problems; but the Minister did not make a speech which was calculated to promote that goodwill which should exist. If we move legislation of this nature it is necessary to create a healthy relationship between the three specific sections of the population. The first section consists of those who were actually under fire, the soldiers at the front. The second section consists of those who were not actually under fire, many of whom made more money than they have ever had. The third section consists of those who throughout were opposed to the participation in the war. The correct relationship should be created amongst those three sections. But what is more, the correct relationship should be created between employers and employees in this counthy. The Minister said in his statement that this Bill had a twofold object. It did not only aim at re-absorbing people who were discharged from the army into their former sphere of employment, but it also aimed at providing work for people who were not in employment previously. That is so. In addition to all that the Minister tells us that this Bill represents only one page in a big book. Why is that page so tremendous in scope? Why does this one page make provision for nearly every one who was in the army and who did war work? What does he leave for the rest of the book, the book which was read here by the Minister of Demobilisation? Why is this Bill so comprehensive? I want to say in clear language that we are not opposed to giving employment to those people who are discharged from the army. We do not want mass unemployment in South Africa. Steps should be taken to place these people in employment. But they should not be re-absorbed in their former spheres of employment, if as the result of that unemployment is created amongst other people. That is the attitude which we adopted in the Select Committee. I am sorry that the Minister did not clearly indicate in his speech that it was recommended by the Select Committee that provision should also be made for people who would be forced out of employment as the result of the application of this measure, that the State should shoulder the responsibility in that respect too. We on this side say that the State should not exercise its discretion in such a manner that other people will become unemployed. That would be a mistake. The State is responsible for providing unemployment for everyone, including those who were against the war; that is the only sound position. Since, in giving effect to the provisions of this Bill in order to obtain the desired results, so much depends on the spirit of this Bill and the spirit in which it is discussed and carried out, we are disappointed in the speech of the Minister. We say that the people will come to the Minister of Labour and ask what the Government is going to do to create a healthy spirit amongst the three sections of the community I mentioned—those who were under fire at the front, those who remained here, some of whom occupied key posts and others who occupied posts which were not key posts, and that section of the population who have consistently been opposed to the war. I think this Bill was tackled wrongly. I want to say very clearly—and that is our attitude on this side—that I find it remarkable that this Bill was introduced at the beginning of the Session and later referred to a Select Committee.

It was first withdrawn.

Yes, it was withdrawn and then referred to a Select Committee. That Select Committee dealt with the Bill, and although it was dealing with it, the Select Committee was nevertheless kept in the dark as to the nature and scope of any other measures which the Government had up its sleeve in connection with those matters which form the subject of this Bill. Why did the Minister take up that attitude towards the Select Committee? The correct procedure would have been, when this Bill was submitted to the Select Committee, for the Minister to tell the Select Committee what he told us today, that this Bill represents only one page of the book. He should have said: There is the book, and here is one page of it. The Minister should have revealed the plans of the Government to the Select Committee; he should have revealed to the Select Committee what the Minister of Demobilisation revealed here today, so that the Select Committee could have considered everything; then the correct relationship would have been created, and then he would not have put the cart before the horse, as he is doing here. I want to impress this matter on the Minister. After every war there comes a period of turmoil—we know that—and since a period of turmoil can be expected after this war, we know that feelings will run high; we must therefore avoid clashes. The Minister knows that from the history of what happened after the last war. After the termination of the war in 1918 there were strikes and unrest, and it was necessary— in 1922 for example—to use armed force to suppress those strikes. Those strikes arose as a result of clashes which occurred, and if the Minister wants to avoid clashes after this war, he should create a healthy relationship and spirit amongst all national sections, as well as mutually in those national sections; above all things, he should create goodwill and a healthy spirit between employers and employees. We also notice in this Bill, generally speaking, that provision is being made for the soldiers, when they return from the war, to get back their employment. Not only will they get back their employment but employment will also be given those who were not formerly in employment. That is as it should be, but in that connection we ask ourselves why such a big share of the responsibility should be placed on the shoulders of the Government, on the shoulders of the citizens of the country? The Minister knows that this Bill specially provides that certain sections of the people will be placed in employment. We have nothing against that. Make provision for these people to go back to their former spheres of employment—and under acceptable conditions. But why does the Government not take its own big share of responsibility; why is this Bill drafted in such a way that it creates the impression that the Government is shifting its responsibility from its own shoulders on to the shoulders of the people? I think it will be a good thing to look at the provisions of this Bill. The Minister said in passing that this Bill had undergone a considerable metamorphosis since its introduction. Let us look at the Bill as it was originally, as it became later, and then we can also look at it as we think it should be. When we look at this Bill we find that it had a special history in this House. We can deal with that history according to the chapters of the Bill. After the Minister had announced that this Bill would be referred to a Select Committee, the Select Committee was told that there was little time, and that the Bill should be rushed through within a short space of time. The Minister of Labour knows that that is so. The Select Committee had the right to take evidence and to call for papers, but when the Select Committee was making investigations there was no time to do that. This is an involved Bill, and it is framed in such a way that it is difficult to study it. In spite of that the Select Committee had no time to take evidence and to call for papers. It was said in the Select Committee that it was such an important Bill that time should be made available for it. Nevertheless, the Bill was rushed through, and no evidence was heard. I take it that if the Select Committee had been able to hear evidence, it might have come forward with something better than this Bill which is before the House today. But that opportunity did not exist. There was dissatisfaction with the Bill on all sides. I do not want to go into that again. The Minister said here that there was inefficiency—that he was not fit for the chair. I do not want to go into that again. The Minister made a good joke, and I shall leave it at that. There was dissatisfaction with the Bill, however, and I want to warn the Minister of Labour that there will be greater dissatisfaction—there will be great dissatisfaction in this House if he displays an unwillingness to accept reasonable suggestions. He must be prepared to lend his ear to all sides of the House, which have stated publicly that they will bear joint responsibility for this Bill. The Minister must lend his ear to all constructive suggestions which are put forward. This Bill had a difficult passage in the Select Committee. I shall not enlarge on that, because other hon. members will deal with that aspect of the matter. This Bill was greatly altered in the Select Committee— also by way of amendments which came from the Minister and his department. That shows that the Bill was not so well thought out and drafted that it would meet all the requirements. Apart from that, amendments were put forward from the Minister’s own side. Amendments also came from this side, which the Minister had to accept. The underlying principle of this Bill is that provision is being made for people who did not have work when they joined up, in addition to other cases and since that is the position, it is tantamount to an outright admission on the part of the Minister and on the part of the Government that after this war we will have unemployment and that there will not be enough work available for all employees. That is a direct indication to us of what lies ahead. Since that is the case, I cannot help thinking of all the statements which we heard as to the wonderfully prosperous period which awaits us after the war. We were told of a new world. But when we deal with legislation of this type, in which provision is made that work should be given to all, one does not notice that prosperity which is so often spoken about. We on this side are of the opinion that this Bill should have formed part of the general demobilisation plan of the Government. The Minister has now told us that this is only one page out of the book. Well, here we have the one page, and there we have the book. We say that this Bill should have formed part of the demobilisation plan of the Government. I think it is possible even now to start with that demobilisation. I think it is possible to reduce the war expenditure by curtailing the army corps which parades in the streets with uniforms and which is kept in this country for so-called essential military services. Let me support my view by quoting a statement of the Chief Recruiting Officer of the Defence Force. Col. Werdmuller. On the 6th February, 1944, he stated at a recruiting meeting—

And then he emphasises which of the factors more particularly militate against recruiting. Inter alia he says—

At 6.40 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with the Sessional Order adopted on the 25th January, 1944, and Standing Order No. 26 (1), and the debate was adjourned; to be resumed on 4th May.