On the authority of the hon. member for Benoni (Mr. Madeley) and on his behalf, I desire to introduce this motion standing in his name. The motion reads—

When British democracy swept the British Labour Party overwhelmingly into power last year, one of the first acts of the new Labour Government was to democratise British currency and credit. By some, the first step in that direction, namely, the nationalisation of the Bank of England, was regarded as a revolutionary step. By others it was considered as merely formalising the existing position, as the Bank, it was contended, was to all intents and purposes already practically a State Bank. By the British Labour Government, however, the step was regarded as one of profound economic significance, essential to the creation of the new England visualised by the Churchill Government while the war was still on. The nationalisation of the Bank of England is designed, as stated by Professor Dalton, the present British Chancellor of the Exchequer, to enable the Government to borrow as cheaply as possible; to assist industry, the State, and the local authorities; and in every way to cheapen the costs of capital operations; in that way bringing direct monetary pressure to bear on prices and costs to the permanent advantage of the standard of living of the British people. In such manner Professor Dalton referred to the first of the big measures of economic reconstruction undertaken by his Government. Now the purpose of this motion on the Order Paper is to indicate that a similar achievement is overdue in South Africa; and the same means, in our view, must be applied to bring it about, that is to say, the South African Reserve Bank, now a private corporation, should be without delay transformed into a 100 per cent. State Bank. We of the Labour Party are very conscious of the defects inherent in the private control of our money and credit. No less an authority than one of the greatest of English bankers, Mr. Reginald McKenna, indicated that danger when he said not many years ago that “they who control the credit of the nation direct the policy of Governments, and hold in their hands the destiny of the people.” Mr. Speaker, we have proof of the truth of that in the economic and financial history of this country. We remember the calamitous years, 1932 and 1933, and for some time afterwards, when the predecessor of the Minister of Finance, Mr. Havenga, advised, as he was, by a private Reserve Bank, adhered obstinately to an Obsolete gold standard. Hon. members will remember how he almost succeeded in destroying the whole economy of South Africa. We, Sir, shall also not forget the years of capitalism’s monetary policy which led up to the year 1933. That policy, no doubt, was a continuation of the great Churchill mistake in 1925, when the British Commonwealth, on the advice of the private Bank of England, put the whole of the Commonwealth back on the gold standard on a parity that suited admirably the banker and the rentier, but ruined industry, commerce and agriculture. The Bank of England dominated the British Commonwealth at that time; it took the lead, after the last great war, in refusing credit, or making it so dear as to be tantamount to a refusal, for modernising industry and plant, and in particular for building homes and carrying out social construction on a broad basis for the workers. Now, Sir, there are signs, which the discerning cannot help but notice, on the economic horizon today, that the present inflation position, particularly in South Africa, can merge into a period of deflation and serious restriction of credit; and therefore of production and of work opportunities. We hold that there is no time more propitious than the present for the Government courageously to take monopoly control of the currency and the credit of the nation. Abraham Lincoln advocated that policy many years ago. He was both statesman and prophet. Referring to the duties of Government in regard to the organisation and control of the country’s credit, he said—

The actual position in South Africa today is that the authority of our State over the people’s money is an emasculated authority, for we have given the real power to a private corporation; private, I would emphasise, indeed. Since its inception the Reserve Bank has paid out to the shareholders £2 million in profit. It is admitted that it has also paid out profits to the State to the extent of just over £3,500,000. That only goes to emphasise that the bank, as it is constituted and operates today, is a kingdom within a kingdom, a partner with the Government in earning profits which have amounted to over £5,500,000 since the inception of the bank; profits accruing from the issue of the people’s money, and which should go back to the people. This motion calls upon the Government to end that position. We hold it cannot be justified either economically or morally. Hon. members may recall Mr. Churchill’s arresting book written in 1918; it was called. “World Crisis”. In that book he points to the danger of the continuance of private control of the nation’s credit. I quote from it. He was thinking of the immediate post-war years—

That indicates the present danger, indications of which, he who runs, may read in this country. We on these benches hold that the credit required by the Government — and the Budget has indicated to us what an enormous volume of credit will be required—should be created by the central bank. In case there is any mistake in regard to my meaning I want to reiterate, “the credit required by the Government”. I am not at the moment referring to private enterprise, although I know a great deal of Government-issued money will in turn become the credit for private enterprise. Credit created by the Government must be issued on the security of the productive capacity of our people, and on the authority of this sovereign body, this Parliament. Such credit required by the Government—I am not now referring to private enterprise—is now created in the form of repayable debt which in South Africa has accumulated as against the capacity of our people up to just on £600,000,000; that debt can only be repaid by involving the country in further debt. The service of the debt today runs into an expenditure higher than that on primary and secondary education. To a great extent, then, the Government of this country has not effective economic power over the South African economy. What is the proof of an assertion of that nature? First, the self-confessed failure of the Minister of Finance to obtain cheap money for the housing of the people, particularly those who earn very little; and his failure to get cheap money for agricultural development and soil conservation. I commend to the House the words of Sir John Anderson, until recently Chancellor of the Exchequer in England. He hit the nail on the head. I see the hon. member for Sunnyside (Mr. Pocock) is smiling at the mention of Sir John Anderson’s name.

Quote what he said about the State bank.

He said that the first World War was a 5 per cent. war, rising to 6 per cent. and more after it; that the second World War was a 2 per cent. war, when it could have been a 1 per cent. war; and he asks why is it necessary after the war for any nation to pay 3 per cent. to 3½ per cent. for housing and other of the people’s necessities. The Minister of Finance, now that he has introduced a peace Budget to this country, has at his command a magnificent instrument. But he is shorn of the necessary powers to use it. Here I want to refer—and it is I think an appropriate stage of this discussion — to interest rates prevailing in the Union. In an economy such as ours the governor of that economy is the interest rate. Now it is true that the trend of interest rates since 1939 has been downwards, slightly. Union Government stock fell ½ per cent. and is now 3 per cent. Municipal stock fell 9-16ths and now stands at 3 3-16ths. Union Treasury bills fell ¼ per cent. and are now 1¼ per cent.

One per cent.

The point nevertheless holds good. Loans under the Loans Act fell ½ per cent., and the rate is now 4 per cent. Building society savings deposit rates fell ½ per cent. and are now 2 per cent. Building society loans and mortgages fell ½ per cent. to 1 per cent. and are now 4½ per cent. to 5 per cent. These rates are still applicable. I thank the Minister of Finance for his modification of one of the rates I read out….

I might have qualified another one, but I was kind to you.

Government loans to agriculture, to the ex-volunteer and to local bodies are round about 4 per cent. That is the Treasury basic rate. We hold that is a usurious rate in the present conditions, ‘and in view of our past experience particularly after the last war. I am not prepared to advocate a sudden fall in these rates generally. I am thinking principally of Government loans. In my view a lead is necessary to the country by the Minister of Finance in reducing the Treasury rate, particularly for housing, agricultural development, road construction, and especially for the needs of ex-volunteers. We are proposing to give to our ex-volunteers under the Housing Commission a scheme for their housing which could well be carried out by any building society. The insistence by the Minister of Finance on a 4 per cent. rate for ex-volunteer housing shows that he is determined to persist in a policy of high interest rates on Government loans. The high rates as laid down are oppressive. They are in my view an incentive to still higher rates, and if the trend continues it will stimulate speculation, resulting in’ heavy speculative investment. The point I want to emphasise is this: We must insist on a reduction in interest rates. It is in that way that the usage of the Reserve Bank will be advantageous to the programme that the Minister has in mind and to those sections of our community who need desperately the economic and social construction which we term social security. We see on all sides how lack of authority by the South African state is holding up vital social construction in this country. Take the farmers’ mortgages. They are carrying an oppressive burden in the form of 4½ per cent. loans from the Land Bank, which acts on the advice and on the authority of the South African Reserve Bank. The farmers’ interest rate could well be a 1 per cent. rate; proving that a conversion programme of the bonds on agriculture could be carried out by a State bank, lightening the oppressive burden on the farmer, lowering the cost of production of agricultural output, and cheapening the incidence of prices on the consumer. We know that the whole of our housing programme has been held up. Why has not the Government and the National Housing Commission embarked on an ambitious plan for housing the lower wage groups, especially the non-Europeans? This is one of the reasons: The Minister obstinately insists on a 4 per cent. basic rate. He knows quite well that the rental and purchase price of any house built on a 4 per cent. rate is a greatly inflated price and beyond the capacity of those whom it is designed to help. What about our soil conservation projects? These will be impossible if we have to rely on private money; or put undue reliance on private credit, and therefore advance to the farmers loans on 4 per cent. to 5 per cent. We submit that special credit is necessary for that important emergency and national service. Then the capital construction required for the extension of our schools and hospitals, our roads and public buildings— these can never be undertaken economically in South Africa on dear money, and today any rate over 2 per cent. can legitimately be called dear money. The time is now for the State to assume sovereign power over the people’s credit, and promote adequate cheap money for State purposes. Hon. members opposite will, I think, respect the opinions of Mr. Mackenzie King, the conservative Prime Minister of Canada. I quote his recent words—

What then do we, as a party, want? Briefly we want 100 per cent. Government control, not, as the Minister has pleaded, a 50 per cent. control.

You want Labour control.

The hon. member for Durban (Central) (Mr. Derbyshire) could well have a little more self-control during this debate. We want, secondly, the creation of credit not by the creation of debt, the bad old system; but credit created on the productive capacity of our people, and almost simultaneously repaid in their increased efficiency and productivity. That is very much more than formalising the present position. We are not asking for the formalising of the present position. We visualise a profound monetary reform. To achieve that reform what would be the mechanics of nationalisation? I want to indicate that we are not in this debate directly interested in the nationalisation of the big commercial or trading banks. We hold that the central bank, under State control, could carry out even more effectively than it does the economic and financial controls it has today over the joint stock or trading banks. All the present controls would remain; for example, through the open market policy of the Reserve Bank, thus influencing the investments of the commercial banks; the holding by the Reserve Bank of the country’s cash and gold reserves, a very important function; the fixing of the bank rate which would then be decided in conjunction with the bank, on the floor of this House; and the issuance of the country’s notes. The bank would still remain the Government’s adviser and banker; and it would still remain the adviser and the banker for the commercial banks; and still insist on a compulsory reserve to be deposited by them against the security of their operations in the service of the public. What, again, I ask, would be the mechanism of nationalisation? We have successful methods as examples: Australia, Canada, New Zealand, some of the Scandinavian countries, even the United States of America up to 1917. In the countries I have referred to, where there are Labour or semi-Labour governments, control of the national credit and money has undoubtedly been carried out with conspicuous success. The process of transference to the State is well set up in the recent British legislation. According to that method, the stockholders would disappear and would get adequate compensation. In England they were bought out by the issuing of 3 per cent. Government stock, as much stock being issued to them as would ensure to them an income not less than accrued to them from their own bank stock. What is the value of our South African stock today? The nominal value is £1,000,000; the market value stands at £2,285,000. In view of that, if any nationalisation project were carried out in South Africa, we need not be any less generous than the British Labour Government. The gains to us would not at once be very considerable in cash profits; but the gains in social assets, in the power to carry out great social planning, so desperately necessary— those gains will be incalculable. The essential principle to be established in nationalisation is that the ultimate monetary power in South Africa must rest with the Government, and not with independent shareholders. There seems to be no other method by which that can be achieved except by nationalisation. I know the Minister will not accept this proposition. I appeal to him, however, to give it careful consideration in the light of the practice in the rest of the British Commonwealth of which we are a member, and in order to meet the financial needs and the social construction essential on a big scale to our people. There will be criticism of the motion as is this morning presented to the House. I think the present Governor of the Reserve Bank indicates the type of criticism that is likely to be advanced. Dr. de Kock, speaking at the last general annual meeting of the South African Reserve Bank, said—

We expect such criticism as that. I would not say that Dr. de Kock meant that as criticism of this proposition; but a statement like that will be used in criticism of our motion. We believe Dr. de Kock speaks scientifically; and that is a vastly different thing from speaking politically; we agree with him. We agree with him, for we know that, properly constituted, a State bank would be run not by substituting costless credit for real savings, but to give to the people their own credit, created by the labour and sacrifice of the workers, to enable them to develop their productivity, to increase their capital assets, to make greater their ability to save, and to create their own security. I have pleasure in commending to the House the motion standing in the name of the hon. member for Benoni.

I second the motion. The Labour Party has not introduced this motion in a propaganda sense, as so many private motions are introduced, but only as part of the Labour policy we have pursued for many years, and it is also I believe a motion which will undoubtedly commend itself to the large majority of the people of this country. Unfortunately, for domestic reasons the hon. member for Benoni (Mr. Madeley) is not able to be here himself to introduce the motion. It is rather disturbing, I might almost say alarming to find that most hon. members have found it to be expedient to be somewhere else when a motion which I believe strikes at the root of the troubles of this country—as well as of most other countries in the world—is discussed. We are being promised a new world. During the war it was necessary for all classes of the community to gather together. I notice that the hon. member for Pretoria (Sunnyside) (Mr. Pocock) is doing a lot of smiling. The hon. member represents commerce, I do not say in a big way—that would be impossible for him, and it would be a tragedy for commerce. But the fact of the matter is, during the war period when civilisation was in danger, when at one time it looked as if all this intricate economic organisation which had been carefully built up to give people who had no work a great deal of money, and to give people who had a lot of work to do a little bit of money, when it looked as if that carefully built up organisation was likely to go, we frequently had the fatuous suggestion that we were, so to speak, all boys together, and at the end of the war we would have a new world. What do we find? In South Africa, probably more than in any other United Nations country, we are finding that big business, big finance, has decided that, now the ordinary common or garden citizen has done his duty, now that he has gone to the front—and in many instances was killed or severely wounded and in many other instances sacrificed a career—now that the common or garden citizen has done his duty, let us have—sponsored incidentally by the Minister of Finance — a movement which says: Let us get back to the good old days. There was a Cabinet Minister who said after the last war: “Let’s make snug!” What the United Party are doing and the people for whom the United Party stand are doing is that they are making snug and they are demanding more and more, with the assistance sometimes of the Dominion Party too. We shall revert, they say, to the old moth-eaten pre-war economic system. During the war we were in danger. Submarines were around the coast; Hitler was advancing, capturing one country after the other. It was all very well then for leaders of commerce and industry and leaders of the Government to tell us that civilisation was in danger, that democracy was at the crossroads, that it would have to be saved at all costs, and they admitted in those days that democracy had fallen very far short of the ideals which really lie behind democracy. They said: We know we have been bad boys, that there are great differences between the people at the top of the scale and those at the bottom. We know there are injustices and that people are starving and fall ill and commit crimes for the mere reason that they are not allowed to earn a living, and we will alter all that provided you win the war for us. So we won the war for them and now they are getting back as the hon. member for Durban (Berea) (Mr. Sullivan) has said, cent. per cent. They want 5 per cent. or 6 per cent. and in the Reserve Bank they get 10 per cent. That is what the position is today. The Government still tells us that we have manufactured a great deal of committees who prove that we are a poor country. I deny that. We are not a poor country, but a rich country. Let us take the question of the finance of the country. How many of our people are engaged in financial operations which give them a very fat living, as compared with the men who are actually producing either by their brains or by their hands? That is the trouble in this country, as in every other country. I do not want to prejudge my own Budget speech, and I do not wish to speak on the Budget which was delivered last week, because* I think it is so bad that it should be treated with silent contempt. But let us examine the financial outfit. I have been reading from overseas papers very serious charges against the South African Government. They do not know them as well as we do or they might do something about it, but it is suggested that the general yield of gold mining shares is 4¾ per cent. of 4½ per cent. I read this some weeks ago from the economic correspondent of the Kemsley newspapers who are now apparently providing South Africa with what they consider we should have. They do not provide us with all the news, but merely with the news they consider our mentality is able to absorb. It is suggested there that 4½ per cent. is the ordinary interest which can be paid on gold mining shares, and unless the Government does something about taxation, there will be no new money available for investment in gold mining in South Africa. And what happens? The Minister of Finance probably reads these reports and so he has given them a reduction in taxation.

Order, order. I am afraid the hon. member is anticipating the Budget proposals. Will the hon. member confine himself to the motion before the House.

I am trying to show why a State bank could stop the malpractices which I now propose to lay before you. The hon. the mover of the motion suggested that this war should have been a 1 per cent. war, but that actually it was a cent. per cent. war. I am going to deal with the question of interest and I want to deal with the State bank in this country in relation to the gold mining industry in which more money is invested than in anything else. I want to show the effect of the contention by the financial experts that we have to have a higher rate of interest for our gold mining shares, or otherwise we will not get the necessary capital. Later I want to show — just to keep myself in order — how the State bank operating in the proper manner, could get the necessary capital and credit without having to call on the money of private investors at all. Now, the argument is that if we are to reduce taxes, there will necessarily be an increase in the rate of dividends paid, but that is not true. What actually happens is this. If we reduce taxation—let us forget about the present Budget altogether as far as that is concerned—what immediately happens is that a share which stands at 18s. goes up to £1, and a share standing at 3s. 6d. goes up to 5s., so that the net return in interest is no more after we have reduced taxation. If tomorrow morning the Minister for some reason finds himself in a position to say that we shall abolish all gold mining taxation altogether, it would not increase the rate of interest or the rate of profit being made by the gold mines by 6d. What he would do is to hand many millions over to the people who speculate on the stock exchange. South Africa is probably the worst country in the world in that respect. The whole point of our financial policy is that we are in effect one gigantic racecourse. People in this country do not invest money in gold shares with the idea of sitting down and drawing a dividend which will establish them for life. They buy gold shares for the specific purpose of waiting for an increase in the value of the shares on the stock exchange. It is just a lottery. If the Minister of Finance would get up in a budget speech or on any of the other occasions when he speaks so well and cleverly and sometimes looks upon us as if we were a lot of schoolchildren, he will tell us time and time again that the gold mining industry is the essence of the whole of our prosperity. I am not really speaking of the leaders of the gold mining industry. I do not yet know whether they are responsible or not, but I am talking of the people of South Africa. I say that the whole of our best asset is not run on the ordinary system of investing money to get a fair return, but it is one huge, gigantic gamble.

Order. I think the hon. member has made that point sufficiently, and should now come back to the motion.

May I quote in substantiation of what I have said, and in a further effort to develop my argument, the main clause in the Bill which Professor Dalton introduced when he moved the second reading debate on the nationalisation of the Bank of England? I was trying to lead up to that, Mr. Speaker, but I must bow to your ruling. Clause 4 is the main clause in that Bill, and it reads as follows—

We are perfectly satisfied that if the Treasury, acting in the general public interest, were prepared to give such directions to the Bank, they could stop this idea in South Africa—and this is the point, Sir, you would not allow me to lead up to—and they could have some kind of control over the investment of capital in the South African gold mining industry, which today is nothing less than a glorified racecourse. It is the industry we are most concerned to nurse in our own interests, but my point is that today it is being allowed to go on perfectly undisciplined. I said before that I am not attacking the owners of the gold mines, but look at your market reports. You will find shares standing at 1s. 9d. Who wants to buy a gold share at 1s. 9d., what could they possibly be worth? But people buy these shares and snatch a tickey profit when they go up to 2s. And a 10s. share can go up to £10. The Minister of Finance has very grave fears of inflation. Well, I do not think inflation is a good thing, but I think deflation is a great deal worse, because I know who suffers from deflation.

Your party suffers from deflation.

Under the new Bill the Treasury can give instructions to the Bank of England as to what kind of policy it should pursue, but what has happened in this country? You will remember that the late Gen. Hertzog made a very pessimistic speech in the Free State, where he practically said that this country was in for a period of depression, and what happened? Immediately he made that statement the private banks began to draw in their overdrafts and to restrict credit. I have heard it said by a prominent banker that good banking policy is to restrict credit in times of prosperity and to extend credit in times of depression, and theoretically that is good banking policy. But it is never put into practice. What does happen is entirely the reverse. As soon as the private banks feel there is any danger of depression, they immediately begin to call in their overdrafts and to examine once again more carefully the security provided for their overdrafts, and they restrict credit, and therefore precipitate a depression. If time allowed of it, I could quote innumerable instances where private banks almost eliminated a whole industry; if it suited them to manufacture jute in Bombay rather than in Scotland, because in Bombay they could get coolies to work for a penny a day, credit was withdrawn from the manufacturers in Dundee, and industry transferred to Bombay. There are many such instances. Deflation is one of the things we have to guard against. Apart from on every occasion enunciating his financial policy so as to avoid inflation, I would like the Minister of Finance to do something to guard us against deflation, and there is only one way in which the Minister can guard us against any possibility of deflation in this country, viz. by nationalising the Reserve Bank. The Reserve Bank is the kingpin. By virtue of this Bill the Treasury will be in charge, and since the Hon. Minister says he sees deflation approaching in this country, I want to ask him why do we have deflation? Well, certain people lent the Government £500,000,000 during the war. That may, according to the pre-war level, probably be worth only £400 million, but then there is inflation, and the £ goes down to a level where it is worth probably only 5s., and the people who lent this money to the British Government during the last war at a certain parity eventually through the deflation embarked upon by the Bank of England and other private banks have now got back £1,000 million, and that is a swindle. There are many businesses which strive for deflation. The Chamber of Commerce wants deflation. I am not so sure that the Minister does not want it. The people who have lent the money are always in the best position when a policy of deflation is embarked upon. They lend £1 at a time when the standard of living index figure is 100, and are repaid their £1 at a time when the figure is 50 and their £1 is worth twice as much, and that is the story of the banks. Where do the banks get their money from?

Overdrafts.

They get their money by lending out your money and the Government goes hand in hand with that. After all, how can a bank give credit? What is the credit of any country; the credit of the country is the production value of the work of the people of the country, and so when the bank lends you money which they have not got, to the extent of ten times their actual deposits, they are lending you money on the strength of the stability of the country and the ability of the people to work and to produce, to use their hands, to grow mealies and wheat, and to make engineering articles and clothes. The bankers base their credit on the country, but surely the credit of a country belongs to the country, and if that is so the country should use its own credit and it should only use it in one way, namely by being in control of its banking system through the medium of the Reserve Bank. I believe that this case is unanswerable. From time to time we are told by the Government that they want to take a forward step. They and their committees say that we are a poor country, but we will go no further forward until such time as we use our own credit and our own currency for our own benefit. When we decide to do that, there will be no danger of inflation, because inflation can be checked at its very source by the utilisation of a measure such as I have suggested; nor will there be any danger of deflation because that can be checked at its source by this measure. In other words, democracy as we know it in this country is only a mockery such time as we sit here solemnly and discuss various matters when we well know that the whole future of the country and its whole economic structure are not in our hands at all. We gladly pass estimates on a Budget, spending £120 million. That is nothing. More than the Budget has been made on the Stock Exchange in Johannesburg in the last few days by certain people who know, so the financial policy laid down by us does not matter very much. And I want to know who loses it. I do know. It is the people of the country who use their hands and work, because after all that money is exchangeable for articles, and those articles can only be made while the people work. So every million pounds that is made is a tax on the community, a drawing away from the community of the products of labour, and only when we take charge of our own currency and our own credit, and what is more, only when we are prepared to use it for the benefit of the people can we take that step forward towards social security which I believe should be and must inevitably be our ultimate goal.

I am really astonished at the nerve of hon. members of the Labour Party in daring to get up in this House to speak of bank reform and then to expect us to take them seriously. Do those hon. members suffer from such short memories; have they forgotten what happened in this House in April, 1944? At that time there was a Banking Bill before the House. The hon. Minister of Finance introduced a consolidating Bill in connection with our Reserve Bank. We thought that that was the time to make the Reserve Bank the institution that South Africa needs, and in an amendment we very clearly put our attitude. I have the amendment here; it is very clearly worded. We asked for those very things for which my hon. friends on the Labour benches are pleading today. May I just read to the House the third portion of the amendment?—

Because our amendment apparently did not go far enough, the hon. member for Krugersdorp (Mr. van den Berg) moved an amendment which was even more far-reaching, and I can still picture him addressing the House.

I still remember the ardent plea of the hon. member for Krugersdorp in explaining the dangers that were threatening South Africa, and how South Africa would be ruined but for the Labour Party, and that only the Labour Party had the means in its hands to save the country. That was on 24th April, 1944, and the following day we were called upon to vote on this question of life and death as far as South Africa was concerned, and what happened? I can still picture one member after another fleeing from the House, fleeing with a hang-dog air from their own amendment, from their duty to save South Africa from those things about which they again had a great deal to say today. I want to tell my hon. friends on those benches that when the question of bank reform is again discussed in this House, they ought to remain silent; they ought to remain silent when decent company discusses banks and banking policy in South Africa. I looked for the names of the people who voted; I looked in vain for the name of the hon. member for Durban (Berea) (Mr. Sullivan); I looked in vain for the name of the hon. member for Fordsburg (Mr. Burnside). He told us a moment ago that South Africa would perish if their motion were not accepted, and when the time came for them to save South Africa from ruin, they fled, and we were left to hold the fort.

Where is the hon. member for Krugersdorp today?

Yes, where is the hon. member today? He almost shed tears about the dangers which threatened South Africa.

How did the hon. member for Berea vote?

No, he did not vote at all.

He was also conspicuous by his absence.

Yes; I notice that in the division which took place on 25th April, 1944, the name of the hon. member for Berea is conspicuous by its absence, as well as the name of the hon. member for Krugersdorp and the name of the hon. member for Fordsburg and the whole Labour Party. When South Africa had to be saved, they were not there.

That was during the war.

I then decided to move an amendment to the motion of the hon. member for Benoni (Mr. Madeley) for two reasons. In the first place, I was afraid that they would again disappear and that we would then be left without anything at all; and in the second place I moved this amendment because here we give expression to the belief of this side of the House.

And what is that?

I am not prepared to vote for the motion of the hon. member for Benoni, for two reasons. In the first place, it is so vague that it is capable of any construction one wishes to put on it. “The Reserve Bank shall be converted into a State bank, which will be the owner, the controller and the issuer of currency and credit.” That can be read as meaning the complete nationalisation of the credit and banking system in South Africa.

But he says he does not want that.

It is capable of that construction. In other words, people who are in favour of the abolition of all private commercial banks could support this motion. And I find the next sentence equally vague: “It must be converted into a State Bank, especially to provide the necessary finance for social and economic reconstruction.” Those people who believe that the Reserve Bank should be given a sort of machine in order to print cheap paper currency so that the State can spend it through the Minister of Finance could support that. They would say: “This is just what we want. The Reserve Bank must print cheap paper currency and place it at the disposal of the Minister of Finance.” I do not agree with that and for that reason we move this amendment. Let us now come to the amendment. In the first place we say that it is imperatively and urgently necessary in the national interest to take the control of the currency and credit of this country out of the hands of private interests. I just want to say to the Minister—and I think it is necessary to say it—that I am not a socialist. I do not believe in nationalising everything in South Africa. I believe in private ownership and I should like to retain private ownership in South Africa. I would only be prepared to nationalise everything in South Africa, to nationalise all ownership, all property in South Africa, if at the same time I could nationalise a few of the elementary virtues. If I could make everyone equally hard working; if I could make everyone equally thrifty and if I could give them a few other elementary virtues in the same degree, I too would be prepared to divide everything in South Africa on an equal basis and to make everything the property of the State. But as the world is constituted I am not prepared to nationalise everything in South Africa. But I do believe that there are certain things which ought not to be under private control.

Farming, for example.

Just as it would be unthinkable to hand over the administration of justice to private individuals, to let private shareholders decide who the magistrates shall be, just as unthinkable and undesirable it is, in my opinion, that the power to control the entire monetary and credit system of our country should be in the hands of private persons. There are certain things for which the State must assume responsibility, and in connection with which the State cannot delegate its responsibility to someone else, least of all to private interests. We in South Africa have gained bitter experience of the harm which can be done to the entire economy of South Africa if the banks, on the instructions of people overseas, suddenly restrict credit facilities, thereby knocking the bottom out of everything in South Africa. I know what happened in South Africa in the years 1920-’21. It was then suddenly on instructions — one does not know how those instructions were given — it was suddenly decided on instructions from the overseas directors of the banks in South Africa, that it was in their interests to restrict credit facilities in South Africa and to knock the bottom out of everything. That destroyed the well-being of the farming population in South Africa to such an extent that even today the farmers are still struggling to recover from what happened in 1920. We do not want to have a repetition of that in South Africa. I do not want to suggest that we can eliminate all depressions in the future, but if another depression occurs we shall know that it will not have been manipulated by private interests, and we want to have the assurance at least that the Government of the day will be responsible and that we shall be able to call upon the Government to give an account in connection with this matter. I told the Minister of Finance on a previous occasion that this is becoming the accepted view of every country, of every progressive country in the world. That is the tendency of banking institutions at the present time. Every country had the same bitter experience which befell South Africa, and they all decided that it must not happen again if they can avoid it, that private interests must not again be allowed to place their countries in this position. In 1944 I quoted to the Minister the example of America which had made a start on these lines. New Zealand has followed suit; Canada has done so; Denmark has done so, and Sweden has done so, and now England—I do not know whether we should call her the mother or father of the banking system of the world—has followed suit. I think the Minister of Finance is inclined to follow the example of London.

It is said that London followed our example.

No, that is not the case. In this motion we are asked that we should buy out the private shareholders of the Reserve Bank. That has been done in England but it has not yet been done in this country.

The same rate of interest is still being paid to them.

Why not? The shares of the Reserve Bank are worth something like £283. I am prepared to pay it to them. That would not involve them in a loss. At the same time the motion was introduced the Minister refused to agree to this. He stated that he was not convinced that that was the direction of banking development. I must confess that I am still amused when I read the speech which the Minister of Finance made at that time. In order to show the House that that was not really the direction of banking development the Minister gave certain examples. In order to prove our proposition we quoted the example of all the young and progressive countries, such as America, Canada, New Zealand, Denmark, Sweden, etc. But the reply of the Minister of Finance was: “Look at the other countries of the world which are not developing in that direction; look at the Argentine; out of twelve directors, the Government only nominates two; look at Chile; look at Peru; look at Colombia.”

The Argentine is a rich country.

He told us that in those countries the Government appointed only three of the twelve directors. He mentioned the case of India, where the Government appoints five out of thirteen directors. He went on to say that Portugal, Holland and Belgium were not doing it, either. Since that time England has ranged herself on the side of the school of thought which feels that the banks controlling the currency and credit of the country should not be in private hands, that private interests must be eliminated.

Do you want the Government to nominate another director on the Reserve Bank so that it will have a majority?

No, that is not what I want. I shall deal with that point later. Amongst the countries going in that direction we now find England with her ripe experience of banking, with the great tradition she has established in connection with banking institutions. Amongst those countries we find America, with her Federal Reserve Board which is appointed exclusively by the President. We have Canada, New Zealand, Australia, Denmark, Sweden, and so we can go on. Alongside South Africa we have the Argentine, Peru, Chile, Colombia—I hope hon. members all know where those countries are—Portugal ….

And Holland.

Yes, and it is for us to choose which school of thought South Africa should follow. Personally, I have not the slightest doubt where we ought to stand; I have not the slightest doubt where the interests of South Africa lie. What do I ask for in my amendment? I ask for three things. We ask that effect be given to the principle that the tremendous power of controlling currency and credit in this country should not be in the hands of private interests. Having regard to that, we ask for three things, the first being that the private shareholders of the Reserve Bank must be bought out. A capital of £1,000,000 has been invested in the Bank. The shares of £100 each have risen to approximately £282, almost three times as much. It would require a little less than £3,000,000 to buy out the shareholders. If we give them State securities at 3 per cent., they would get 9 per cent. interest, whereas today they are getting 10 per cent.

What advantage is to gained?

We are in the hands of the Reserve Bank. The Reserve Bank plays a mighty role in our economic life. It can make or break the country, and we are not prepared to leave that power in private hands any longer.

Hear, hear.

I am pleased to have the support of the hon. member. We want the Minister to buy out the private shareholders. The Reserve Bank then becomes a State institution; it becomes State property, and all the directors are nominated by the Governor-General-in-Council. Various interests can be represented. It is the duty of the Government to take care of that. In his budget speech the Minister of Finance told us that he was going to make a £1,000,000 gift to the Reserve Bank. Just imagine, £1,000,000 is taken from State coffers and given to a private corporation which is owned by a thousand shareholders in South Africa. A gift of £1,000,000 is made to a private corporation. I do not object to the fact that the Minister seeks to strengthen the position of the Reserve Bank, but as the bank is constituted at present it is nothing but a private corporation, and State money is being given to strengthen the financial position of a private corporation. That is the first thing for which we ask. In the second place, we ask that the powers and rights of the Reserve Bank be extended so as to give it full control over the purchase and sale of gold in order to promote international trade in the interests of the Union of South Africa. The Minister stated last year that that was unnecessary. He says we have that power at the present time, that under the Act of 1933 the Government can promulgate regulations with reference to the currency and the credit of this country, and also with reference to our rate of exchange. He stated that in terms of the same section they could even apply sanctions if the bank refused to give effect to the regulations. I would just like to say to the Minister that the fact that those powers were granted to the Government under the Act of 1933 proves that the Government had reason at that time to distrust the Reserve Bank and the influence of private interests.

In what year was that?

In 1933. It had reason to distrust the Reserve Bank. The Government was perturbed, and that is why the Act was passed in that form.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

When business was suspended I was dealing with point (b) of my amendment, and I had stated that the Act of 1933 was passed and that the Act was not repealed in 1944 by the Minister of Finance because the Government was afraid that private interests in the Reserve Bank might exert their power. The Minister himself does not feel happy about the position, and he feels that it is necessary for him to retain the power to take active steps in the event of the private interests abusing their tremendous power. That type of co-operation between the Government and private interests in a state of affairs we do not like. They do not trust each other and while the respective parties are apparently friendly disposed towards each other the Minister sits with a revolver in his hand or his pocket, ready to shoot them at any moment and to render them powerless if anything happens. If there is any fear in the mind of the Minister, if there are grounds for fear, let him introduce legislation which will completely eliminate this danger. I should like the Minister to reply to this point. We are discussing the powers and the rights to be given to the Reserve Bank. In the first place the Reserve Bank should have the sole right to buy and to sell gold. A central bank, especially in South Africa, must have the sole right to buy and sell gold if it wants to carry out its functions properly. For that reason the bank was given that right. It cannot function properly unless it has that right. That is the only way in which the commercial banks have been compelled to go hat in hand to the Reserve Bank occasionally, because it is only through the Reserve Bank that they can get foreign currency to pay for overseas purchases. That is the only hold which the Reserve Bank has over the commercial banks. For the rest they have sufficient capital to be independent. The Reserve Bank must have this power, but are we prepared to give this power to an institution which is controlled by private capital? This power should be given, but it should only be given to a State institution, to an organisation which is controlled by the State and for which the State is responsible. But there is a second power that I should like the Reserve Bank to have and that is the power and the right to undertake ordinary banking business if they find it necessary. That is something which the Minister has not yet explained to us. Under the original Act the Reserve Bank had this power. The Minister took that power away in 1944. The bank should have this power at a critical period when it is essential in the interests of the country.

It still has this power.

No, it is no longer in the Act. I shall be glad if the Minister will indicate which section it is. We do not want another depression in South Africa if we can avoid it. As I see things, a sufficient volume of credit should be made available for our economic life, and that volume should be determined from time to time by a Banking Council, that is to say, the volume of credit. In that respect I agree with the hon. member for Fordsburg (Mr. Burnside) when he says that in times of plenty the credit can be curtailed to some extent, but in difficult years it should be available more readily. Assuming that the Reserve Bank determines what the volume of credit should be and asks the ordinary commercial banks to act accordingly and the commercial banks fail to comply with that request. The Minister stated that under the regulations of the Act of 1933 sanctions may be applied. But then the die will have been cast; it may be too late. Our farmers will again have been ruined and our factories will have suffered a severe blow. For that reason I want the Reserve Bank to have the right to undertake short-term business in South Africa in the interests of the people when that time arrives. That is the only way to get the ordinary banks to realise what their duties are. I should like the Reserve Bank to have those two powers. But now I come to the third paragraph of my amendment—

I imagine that a Banking Council of this nature will fulfil a very important function. It stands to reason that we do not want to have political appointments on the Council, as we have in connection with many Government bodies. I venture to say that at the present time political appointments are made in the case of the Reserve Bank also, that political appointments are made to the board of directors, otherwise some of the directors would never have been appointed.

Have we ever removed anyone from the board for political reasons?

Certain political appointments have been made.

Were they made by me?

No, I do not want to suggest that, but there have been political appointments, and the Minister has since had an opportunity of rectifying things.

Those appointments were not made by me.

A Banking Council of this nature will play a very important role in the financial and economic life of South Africa. I just want to mention a few persons who, in my opinion, should serve on such a Banking Council. In the first place there is the President of the Reserve Bank; then there is the Secretary for Finance, who must be the link; then there is the General Manager of the Land Bank who, in my opinion, should also be on the Banking Council. Then I feel that the chairman of the Industrial Corporation who has his finger on the industrial pulse of South Africa should also be on the Council. There we have four persons who ought to be appointed to the Banking Council by virtue of the important positions they occupy. In consultation with the Minister of Finance they could lay down the monetary and credit policy of South Africa. I may be asked what the position is going to be if the Banking Council and the Minister differ. Assuming that the Minister wants to use the Reserve Bank injudiciously and the Banking Council refuses to fall in with the Minister’s suggestion. Who is going to determine the policy? It seems to me that in that case we ought to do what is done in Australia, namely, where the Banking Council and the Minister differ on the monetary and financial policy, both parties are required to report to Parliament and Parliament will then decide whose financial and monetary policy should be followed in South Africa. I therefore venture to suggest my amendment which reads as follows—

1. (a) to buy out private shareholders of the Reserve Bank;
2. (b) to extend the powers and rights of the Reserve Bank so as to give it full control, inter alia, over the purchase and sale of gold in order to promote international trade and in the interests of the Union; and
3. (c) to institute a Banking Council which will in conjunction with the Minister of Finance exercise full and effective control over the monetary and credit policy of this country.”

I should like to give a brief summary of the reasons for this amendment. The power to control the monetary and credit policy of our country is too great to be left in private hands. All progressive countries realise this and they have rectified the position. Today those powers are granted to the Government only. If it is necessary in countries like England, America, Sweden, Denmark, etc., it is a hundred times more necessary in South Africa, because in this country we have two big commercial banks, which are foreign institutions, doing more than 90 per cent. of the business of the country. Their head offices are not in this country; their boards of directors are not here; the vast majority of their shareholders are not in this country. There is always a risk under the present position that the policy of these two banks may be laid down not in the interests of South Africa but in the interests of people overseas. I can quite imagine that banks of this kind may restrict the credit facilities of local commerce and industry for the sake of the promotion of overseas trade, and in that way cause harm to the local industry. That should not be allowed. That power should not be in the hands of private persons, particularly in a country like South Africa where we have two foreign banks, because the danger is too great. The cost involved in this change will not be great. For less than £3,000,000 the Government can become the owner of the Reserve Bank by buying out the private shareholders, and that power and control will then be in the hands of the State where it ought to be. I feel that having regard to the difficult times which may lie ahead, having regard to the danger of a repetition of what took place after the previous war, we should have a body in South Africa with sufficient power to prevent another depression overtaking us if it can be avoided in any way. I do not suggest that it will entirely eliminate depressions. When we look at the financial policy of the Minister it would seem as though we are moving in that direction. But in the event of such a contingency the Reserve Bank and a Banking Council of this kind could act as a brake—not merely by giving the Minister of Finance good advice—but a brake to prevent the commercial banks which are controlled from overseas from abusing their power at the expense of South Africa. For that reason it gives me great pleasure to move the amendment which stands in my name.

I second.

I must admit quite frankly I cannot see any very practical purpose is being served by this debate. It does of course give hon. members the opportunity to put forward their ideas, but I cannot help pointing out that as recently as two years ago the House had the opportunity of discussing these things when the issue before us was a practical one.

But we were in the war then.

The war apparently prevented my hon. friend over there from saying what he thought about those matters.

Have you forgotten about the war?

Yes, yes. Apparently my hon. friend also has, he has also forgotten some of the things he said during that war. This matter was a crisp issue in 1944. My hon. friends over there despite the fact there was a war on did come forward with their views. They expressed their views very fully on that occasion. They were not impeded from exercising their views that they put forward on that occasion when we were discussing the South African Reserve Bank Bill. We had before us two amendments. I am not concerned now with what happened when it came to a vote in regard to these amendments, but I do want to make this point, the points of view now put forward were put forward then. They were put forward then when we were dealing with practical issues. Today I am afraid the matter is purely an academic one. It could hardly be expected, two years after we had dealt with these matters in a practical way and the House had come to specific decisions, that we should go back on those decisions. During that debate when the Reserve Bank Bill was under discussion, we had the issue put before us quite crisply. The hon. member for George (Mr. Werth) moved an amendment to the effect the Bill should be referred to a Select Committee with instructions to amend it so that the State should have full and effective control over our monetary systems; except for a few trimmings his amendment is exactly the same amendment as was rejected then, two years ago. The hon. member for Krugersdorp (Mr. van den Berg) moved a further amendment, which implied the complete nationalisation of the banking system. I was under the impression until the hon. member for Berea (Mr. Sullivan) spoke, that this is also what this motion means. [Interruptions.] Does it or does it not?

The wording is clear.

The wording is clear. The wording in the motion is that the Reserve Bank is to be converted into a State Bank; it will not only be the controller but also the issuer of currency and credit.

It does not say “sole controller”.

[Inaudible.]

I always understood from my hon. friends opposite that their view is whenever a commercial bank makes an advance it is creating credit. Do they or do they not in terms of their motion wish the private banks to carry on with their function of creating credit?

We do.

Then the motion is not the same as that brought forward by the hon. member for Krugersdorp two years ago.

No.

Two years ago they wanted the nationalisation of the whole banking system. Today they do not. Is that due to the influence of the hon. member for Berea, or is it not? Or is it due to the fact that the Socialist Government in Great Britain has not gone quite so far as the hon. member for Krugersdorp wanted to go?

Why not discuss the merits of the question?

I am trying to find out what my hon. friend wants to get at. If it is now clear they are not in favour of nationalisation of the whole banking system ….

We do not want to do it at the moment.

You do not want to do it at the moment. Now we know. Ultimately they want to do it. I suppose by the time the hon. member for Berea has dropped away from their ranks they will want to do it again; but at the moment they have the hon. member for Berea, and while they have him they do not want to do it. There we have those two amendments, the amendment of the hon. member for George, and the amendment of the hon. member for Krugersdorp, raising the issues that have been raised here today, raising those issues which, when it was a practical question, and the issues were placed before the House, the amendments were defeated by a majority of 68 to 29. I say again I cannot see what practical results are anticipated from raising this matter here today. [Interruptions.] I do not object to the matter being discussed. It is quite appropriate we should discuss these questions, but it does seem to me we are discussing this motion in an atmosphere verging on unreality.

We had hoped you had learned some wisdom.

The mover of the amendment suggests that I should have learned wisdom from Great Britain. He overlooks the fact that Great Britain claims to have learned wisdom from South Africa. I have here before me the speech made by Mr. Hugh Dalton when he introduced the Bank of England Bill in the British House of Commons.

Hugh Dalton did not talk as long as you are.

The hon. member is talking almost as much as I am talking at the present moment. In his speech Mr. Hugh Dalton quoted South Africa as one of his precedents; he was following South Africa; he was following the Dominions, and he specifically mentioned South Africa as one of the Dominions. Now my hon. friend wants me to follow Great Britain, when they have already followed us.

We have the shareholders in South Africa.

How can they be following our example?

Mr. Hugh Dalton says so, not in all the details, of course. The point I want to make in that connection is this, that the essential things asked for in this motion and in the amendment can be done without legislation. Both the motion and the amendment ask for legislation, but the essential things can be done without legislation.

Will you do it?

May I go a little further? If the hon. member for Fordsburg (Mr. Burnside) will allow me, I shall make my own speech, and he will not need to complain about the length of time I shall occupy with my speech. We are told that legislation should be introduced to enable the Government to control the currency and credit policy of South Africa. But we do have that power today.

No, we have not.

Of course we have that power under the law. And that is why the Chancellor of the Exchequer in England, when he introduced his Bill, referred to the South African Central Bank as being substantially State-controlled. The Chancellor of the Exchequer in England did not seem to think that the State in South Africa was lacking in powers in regard to the control of currency and credit policy. On the contrary, he used South Africa to support his new policy as far as the Bank of England was concerned. Let me come a little nearer home. I see sitting very close to the hon. member for George the hon. member for Ceres (Dr. Stals). And what did the hon. member for Ceres say in 1944? These were his words—

That is what the hon. member for Ceres said in 1944.

Is it not true?

It is perfectly true. As a matter Of practical politics, from the point of view of a realistic approach, it is impossible for the Reserve Bank to follow a policy which is in conflict, with the policy of the Government. A change in the law for which the hon. members asked will make no difference whatever as far as the control of currency is concerned. The hon. member for Berea used a very peculiar argument in this connection. He referred to the policy which was followed by my predecessor, Mr. Havenga, in 1931-’33 as far as the gold standard was concerned. I would like to know from the hon. member for Berea when he replies to this debate how the position would have been different if the Reserve Bank had then been a State bank controlled by the Treasury, in other words, controlled by the Minister of Finance, then Mr. Havenga. Surely the whole thing is illogical. One could understand the argument of the hon. member for Berea if he thought the Minister of Finance was right in 1933 but was prevented by the Reserve Bank from carrying out his policy.

He was.

That is not correct. My hon. friend does not think Mr. Havenga was right, he thinks he was wrong. What would the difference have been if the Reserve Bank was a State bank? How would that have prevented Mr. Havenga from carrying out a policy which the hon. member for Berea castigates and holds up as having incurred the country in considerable loss. His argument proves nothing except that the State did then determine the currency and credit policy of South Africa. It did that in 1933 when Mr. Havenga was in office. I say again the hon. member for Ceres is perfectly right when he says it is impossible for the Reserve Bank to follow a policy in conflict with that of the Government. Let me quote in that connection what the Governor of the Reserve Bank himself has stated—

Then, Mr. Speaker, the hon. member for Berea also had a good deal to say about interest rates. I am not going into that subject now; there will be other occasions for doing so. But there is certainly no need to change the constitution of the Reserve Bank in order to secure the fixation of a different level of interest rates. There is ho need whatever to do that. There is no need for legislation to make that possible. All the purposes which the hon. member for Berea mentioned as purposes which he wants to foster in the matter of social and economic reconstruction, all these purposes could be achieved today, and they are being achieved today to the extent to which the departments concerned are able to spend the money which is made available to them. I am afraid in that respect the hon. member for Berea spoke politically rather than scientifically. So I repeat the point I have made; this main request, in respect of both these proposals, namely, that the Government should be able to control currency and credit policy is an unnecessary request. There is no need to pass legislation to bring that about. [Interruptions.] Of course we have these powers today. The hon. member for George went on to put forward another specific request. He wanted legislation which would extend the powers and rights of the Reserve Bank so as to give it full control over the purchase and sale of gold, in order to promote international trade and the interests of the Union. Again, there is no legislation necessary for that. Today the Reserve Bank has that power. It has it today under the power granted to it in terms of the War Measures Act.

It never used it.

Of course it used it. After that interjection I think I should pay no further attention to the hon. member for Fordsburg. [Interruption.] It has that power under a regulation framed under the War Measures Act. But it had that power in the past, and would if need be have that power again under the Currency and Exchanges Act of 1933.

Is government by regulation in such an important matter a good thing?

It has the power today, but presumably there would have to be a power by regulation to deal with the nature of the conferment of the powers on the Reserve Bank. There is no need to pass legislation to give the Reserve Bank that power. It has that power and it exercises that power. [Interruptions.] Legislation is surely unnecessary to give it a power it already possesses.

Was not the regulation introduced because this same power was not in the Act?

No. There is no question whatever of it not having the powers under the Act of 1933. Then, Mr. Speaker, the hon. member for George went on to deal with two other points in his amendment which, it might possibly be held could not be conferred without legislation, although frankly When I look at the extent of the powers conferred by the Act of 1933 I am not sure even of that. Under the Act of 1933 there is virtually nothing we cannot do in the field of currency and exchanges. However, I want to refer to these two matters he mentions. One is his proposal we should buy out the shareholders. Frankly, I cannot see what purpose that would serve.

They have the majority on the Board of Directors.

That is so, and I will come to that later. Perhaps I should have said apart from that. I cannot see what purpose would be served by having legislation in regard to that. It does not affect us from the point of view of the profits of the bank. We get all the profits over and above the limited dividend the shareholders receive, and which of course they would continue to receive under my hon. friend’s proposal. There is therefore no financial advantage in it. The question that arises is merely whether the board should be solely a Government board, and that I shall return to later. Then the hon. member raises another point, the institution of a banking council. I listened very carefully when he talked about a banking council, but I cannot for the life of me see what function it is going to serve. Here we are going to have a board of the Reserve Bank, and then we must have a Banking Council in addition which will—

What is to be the relationship between the Banking Council and the board of the Reserve Bank? In the same motion he suggests that the Reserve Bank should have full control, and also he goes on to say that the Banking Council should have full control. Where are we? Both bodies will be creations of the same Minister. The Banking Council will be a creation of the Minister, and the board of the Reserve Bank will be a creation of the Minister. The Minister has quite enough advice today.

But you do not listen to it.

You have not enough good advice.

He even has the advice of the hon. member for George. If my hon. friend classes it under the head that is not good advice, perhaps I will be able to agree with him. I cannot help feeling the establishment of a Banking Council would simply mean the creation of an otiose piece of machinery. But let me come back again to the point which is after all fundamental to the whole discussion. I refer to the position of the Government in relation to currency and credit as determined by Act No. 9 of 1933. The hon. member for George asked: Who is the master?—“Wie is die baas?” Just listen to this, and the answer immediately comes to everybody’s mind—

Is it necessary now to ask that question— “Wie is die baas?” The Governor-General is the master in the Reserve Bank. Surely that is as plain as one can make it. The control lies today with the State. It lies with the Governor-General in virtue of the very extensive powers he has. Why was that power taken? Because of distrust of the Reserve Bank? No, for no such reason. It was taken at a time when there was the closest co-operation between the Minister of the day and the Reserve Bank—as there has always been—and in a period of carrying into effect a policy which gave South Africa a managed currency. It was in order that South Africa should be able to manage its currency, this Act was framed in those wide terms. While that Act is there we have all the powers my hon. friend wishes to have. We have all the powers the hon. member for Berea wishes us to have. It may be we are not exercising those powers as he wishes us to exercise them, but the fact remains the legislation for which the hon. members asked is not going to make the position any different than it is today. I want to come back, Mr. Speaker, to the point that the hon. member for George makes as to what he describes as the controlling position of the shareholders’ representation on the board of the bank today. I would remind him that the hon. member for Berea described our bank today as being substantially State-controlled. It is perfectly true on the board of the Reserve Bank there are today six directors elected by the shareholders. It is perfectly true that they can out-vote the other five directors. Of course, in 25 years, that has not ever happened.

It can happen.

The Government appoints five directors. It appoints the governor, and the deputy-governor, who hold key positions, very important positions; it appoints three directors in addition. The shareholders elect six directors. They must in terms of the law represent various interests. One of them must represent agriculture, three must represent commerce and finance, and two must represent industry. It is not easy to get them all to stand together on a really big issue. It seems to me inconceivable that a board composed in that way would act in conflict with the policy of the Government. And that is why the hon. member for Ceres said what he did say. But I suppose that there is a remote possibility of them doing that.

It could happen tomorrow.

Supposing they did? There is the Act of 1933.

It may be too late.

No, the Government can step in in the twinkling of an eye, and it has the fullest and most complete powers to see that its policy is carried out. The State’s position therefore, under the existing legislation is fully secured as far as the control of our currency and credit are concerned. I cannot see what would be gained by adopting the views of either the hon. member for Berea or the hon. member for George. On the other hand, I do think we would lose something. I believe there is an element of value in the present arrangements as far as our Reserve Bank is concerned. If this change were made it would mean that the Reserve Bank would become merely a State department, and that I think would be a real loss. I believe there is a real advantage today in the fact we can obtain the objective judgment of outsiders in connection with our currency and our credit. Today the State has all the powers it needs in the background, but it also has that advantage, a very real advantage, of being able to get the independent views of the other directors of the bank not nominated by itself, and that is an advantage which I would be loath to see us lose.

You will get the private banks’ views on banking.

But they are not in the same position of responsibility as the members who are directors of this great institution and who give their advice with a sense of responsibility which attaches to their office. I believe it would be different if our central bank were to be a State bank without any independence at all. For the same reason I am opposed—as it now appears that the whole of the House is opposed — to the idea of the commercial banks becoming State departments.

The resolution does not refer to commercial banks, only the Reserve Banks.

Well, as I have said, I infer from that the whole of the House is at the moment opposed to the idea of commercial banks ceasing to become private institutions and becoming public institutions.

We agree with that.

I am glad the hon. member agrees with that. Apparently he did not two years ago. I would repeat as far as commercial banks are concerned they also are in a position today of extreme strength. The Reserve Bank has very considerable powers in relation to the commercial banks. It increases its powers on the basis of consultation and co-operation. I would like in that connection to refer to what has been said by the Governor of the Reserve Bank in his last address to the shareholders of that institution: “The requisite understanding and co-operation between the Government and the Reserve Bank has been firmly established, as is also reflected in the smooth and efficient carrying out of the emergency financial regulations”. And then he went on to say: “The country is thus provided with special machinery for the implementation of the Government’s monetary policy”. The Reserve Bank thinks these things should be on the basis of consultation, but despite what the hon. member for George has said, it has the power to enter into the field in competition. If my hon. friend would look at section 8 of the Act of 1934, he would see that it has that power. And in the last resort the State has power to enter into the field and do what it deems to be necessary to protect the public of South Africa. And so, whatever danger there may be in the credit making power of the commercial banks can be completely and adequately controlled. To my mind there is danger involved in making the creation of credit a function of the State.

Other progressive countries do not think so.

My hon. friend seems to have misunderstood me because I thought he also did not want the creation of credit to be a function of the State. There is the danger, namely, that credit would be created merely for political purposes and without sound financial principles. That is really the difference between the movers of the motion—I am not referring now to the hon. member for George, because on this point we agree — and myself. On this motion they have made the issue one of legislation, but that is not what matters. It is not a question of legislation but a question of policy, and I admit quite frankly on the question of policy they and I are not in agreement, but I repeat what I said in the beginning, that there is no need for legislation to deal with this matter. Let me repeat that whatever policy the Government wants to pursue, whether it is an old fashioned policy, such as ours is alleged to be, or a new fashioned policy, even a revolutionary policy, that policy can be pursued in terms of the present legislative arrangements.

Is that how the MacDonald Government fell?

I do not know what the hon. member refers to. The difference between my hon. friend and myself is in regard to the question of policy. There is no need for legislation. Having said that I think I should go on to define as clearly as I can the fundamentals of the currency and credit policy which we are in fact pursuing. Currency and credit cannot be created without limits as to amount or basis or purpose. In the creation of currency and credit account must be taken of the existence of adequate cover for the liabilities brought into being, and also of such factors as the productive capacity of the country and the quantity of goods available or which may become available. Governments before now have forced central banks to create credit without regard to factors of that kind, and that I think is what this motion really implies. I think it really implies that we should have the power and use the power to create credit without having regard to these essential facts that I have mentioned. I say Governments ere now have forced central banks to pursue that policy. What have been the results? Progressively increasing inflation, depreciation of currencies, repudiation of debts, ruination of large sections of the people and a large part of the ultimate cost in these cases has had to be borne by the working and middle class sections of those populations. That is what happened in Germany where the cost of living index figure rose from one in 1913 to a million million in 1923. Money cannot be created out of the air without that having some effect on its value or on its purchasing power. I will be told that money is not a commodity but a medium of exchange. That is quite true, but even as a medium of exchange it is subject to depreciation if the quantity in circulation is increased without regard to the quantity of goods which have been purchased or can be purchased on an economic basis. Do not let us make the mistake of thinking that goods are produced merely by an arbitrary increase of purchasing power. It is the economically workable material reserves of a country and the rate of productivity of labour and capital which are the governing factors which provide the foundation for the creation of money. The motion sets before us the ideal of social and economic reconstruction. Let me say that social and economic reconstruction cannot be financed with a currency and credit arbitrarily created by banks, except at the cost of ultimate disaster as far as the community as a whole is concerned.

What are they doing in England today?

They are not doing it in that way.

There is a 10 per cent. gold cover.

Yes, but they are not arbitrarily creating currency in this sense. Such a thing can only be done profitably from taxed revenue to the extent that the current national income affords scope for taxation for such purposes, and secondly from capital, whether it is local capital or foreign capital. Capital means after all the current or present savings, the excess of production over consumption, and in any case it can only be done to the extent to which capital is available for such purposes. That it seems to me is the only sound policy for us to follow, and I venture to say that despite the adoption of the Bank of England Bill by the British Parliament, it is on these lines that the policy of the United Kingdom will continue to proceed. I say that on the ultimate issue as I have defined it, there is no essential difference between our policy here and the policy being pursued in Great Britain. I shall be told, no doubt, that this policy we are pursuing is orthodox, cautious, conservative, old fashioned. I can only say that South Africa has reason to be graceful for the fact that both before the war the during the war itself our financial policy has been based on cautious and conservatism and South Africa is fortunate also that it can look forward to these ideals continuing to prevail in our financial policy in the years that lie immediately ahead.

I think the Minister can comfort himself with the thought that the discussion of this subject may have a good and beneficial effect. It covers the most important matter in connection with our economic life, namely, the function of banking in our economic structure. Even if this House and the general public only come to the realisation of the erroneousness of the term “creation of credit” it will have been worth the trouble. If the general public come to a full realisation of the falsity of the phrase “creation of credit” we will have done a good day’s work. Nothing of the sort can exist. You cannot create sound credit. I would say this particularly to the members of the Labour Party that you cannot create healthy credit. Once it may have been possible, when the people of England had more faith in the goldsmiths than in the Crown, when they rather entrusted their gold to the goldsmiths, and the goldsmiths, as the result of having a great quantity of gold, granted more credit than was covered by the amount of gold in their possession. In this way they perhaps created credit. But in modern times nothing of this sort exists, unless you assume that you can create something out of nothing, which no one can do. Thus it is a false idea that you can create credit and then have assets. The creation of credit simply signifies that you grant powers to the Government or bodies to introduce credit tokens either by way of bank notes which bear a certain nominal value, or by way of cheques. But unless the credit tokens have a basis in assets or earnings or savings they have no value. You may deceive the people for the moment but eventually you will be discovered. You cannot create credit unless you base it on earnings, unless you have another asset which you can give as a guarantee until the credit advanced can be paid off. I am sorry that the Minister of Finance takes up the attitude that everything is so perfect. There I do not agree with him. I will join with him when he says that in the past we really had no reason to condemn the work of the Central Bank in South Africa. I think we have been fortunate in the control of our Central Bank in South Africa. Especially in the early stages, in the transition period, valuable services were given, and we can freely state that until now the Reserve Bank has done good work and that it has functioned well. But we shall be a little premature in saying that because in the past things have gone well they will also go well in the future. The Hon. Minister will remember that before 1920, before the Conference of Brussels, there were very few central banks in the world, but as a result of experience gained in the previous war the world came round to the idea of instituting central banks in order to obtain better control over savings and the granting of credit on the basis of savings, in order, as it were, to create an intermediate organisation between the State and the individuals or between the State and the commercial banks of the time. This worked favourably. From 1920 to 1944 some 20 States set about the establishment of central banks. The last central bank to be established so far as I know was by the Irish Free State. Seeing that today we are considering the future one can hardly say that the future is in any way rose-coloured in view of the uncertainty that prevails. The Minister will ask me in what possible circumstances the present set-up of the Reserve Bank is inadequate. That is not an easy question to answer, because you have the choice of two dangers. The first is you may place the Central Bank too completely in the hands of the State, you may place the bank under the control of the State in the sense that the bank may really be used as an instrument in the hands of the Government, and the Government may utilise the bank to give advances and to provide credit. I do not think it is necessary to mention the names of countries where the State bank has from time to time been compelled to grant credit to the Government. When the State goes so far as to use this supremely important element in its fabric to provide credit arbitrarily the State is being deprived of the ability and the right to walk along the middle path, the golden middle path. As the Government is now satisfied with having a minority on the board and it leaving the majority of the directorate to people representing the shareholders, the Government may well urge, as the Minister has rightly done, that the representatives of the shareholders on the board of the Reserve Bank are unable, either by training or experience or on any ground at all, to act in conflict with the experience and the formulated opinion of the two officials appointed on the grounds of their qualifications. It is true that the majority are no match against the opinion of the experts. But that is not to say that it will not be otherwise in the future, or that you may not have representatives who by virtue of their independence and capacity will turn the scale. It is quite possible. Another feature that safeguards the Government is, as the Minister stated, this provision in the Act of 1933. I do not know whether the Minister was in the House in 1933. The then Minister of Finance stated that he trusted no one with this power, that he did not trust himself with it. Consequently it is dangerous by means of regulation to place the power in the hands of the Minister and his advisers. I think that a gap does exist, and as the hon. member for George (Mr. Werth) pleaded that the State should hold the majority of shares in the Reserve Bank in order to have a majority on the directorate, I must frankly admit that I do not consider in the end that will make much difference. Today you have private individuals as shareholders; they form the large majority of shareholders and representatives of the shareholders are on the board of the Reserve Bank. Possibly they may be people with an independent outlook, and the hon. member for George argues — and there is some force in his argument — that while the provision of credit is fundamental for the welfare and progress of the people you have the position that private interests predominate as far as regards the shareholders. But where I really differ from the Minister is in the following respect. We may assume that in principle you have the choice between the State having full control, which obviates the possibility of abuse, or the public holding the majority of the shares, and this is also accompanied with the possibility of abuse. If I must choose between the two, I should rather choose in favour of the public than in favour of placing confidence in the Minister. That is to say, I would rather private shareholders should receive an appreciable interest in the bank than that the Minister should have the say. In modern times the whole tendency has been towards the creation of central banks and semi-State institutions. Until recently the number of State banks was not very large, but now there are several within the British Empire, in Australia, Canada, and recently in England. But we must take cognisance of the nature of the development of those countries. In passing, I would just say that hon. members must not forget that in England there was, in the Bank of England, a consolidated bank. It was not a central bank in the ordinary sense of the term; it was comprised of two definite but separate sections. One section controlled credit; the other section could always transact private business. It is indeed true that the Bank of England did not transact much private business but nevertheless it had power to do so. I have no information in regard to the exact provisions of the legislation that has converted the Bank of England, but that was the position. In our country we have the choice of two evils. Either we have to place the power in the hands of the Minister by making the Reserve Bank an institution that is in his power, or we must place the institution in the hands of the public. We may agree to differ on the point. On a previous occasion I voted in favour of a majority shareholding by the State in order to ensure that the State has an interest in the institution, but if the question is put to me whether I consider the State should own all the shares, I must say that I am sceptical as far as this is concerned, and whether it would be to the benefit of the public. But there is still another respect wherein, I think, the hon. Minister has not rightly judged the intention of the hon. member for George. The Minister gave little attention to the third part of the amendment, namely, the appointment of a Banking Council. The Minister put the question: What was the difference between the board of the Reserve Bank and a Banking Council such as was proposed by the hon. member for George? In his attitude towards the hon. member for George, the Minister made this contention, that anyhow in the last resort he is responsible for appointments. Let me, however, point out that just here there is a big difference. It is indeed true that the Minister makes most of the appointments on the Reserve Bank. When he is empowered by legislation to appoint a Banking Council, he will have a free choice to nominate anyone, but the law will lead him in the direction where he will be bound in connection with the appointments. I think that Germany was first in 1934 to go over to the idea of appointing a central board, really to advise the Minister in connection with banking, and a number of other countries then followed suit. They were not called Banking Councils, but their functions were all the same. The intention was that the Banking Council should advise the Minister and the Government in reference to credit policy. And when a Banking Council is appointed, as suggested by the hon. member for George, it is in the first place necessary to appoint people representative of certain groups or circles. They must be independent men with experience. There must, for instance, be representatives of the Departments of Finance, of Trades and Industries, and of Agriculture. In that way we shall obtain a more independent body than the board of the Reserve Bank. Let me say at once that we appreciate the work done by the Reserve Bank, but this is a defect, and if the law remains as it is action can be taken by way of regulation, which is a dangerous thing. Action will have to be taken in periods of crisis, and then eventually the whole welfare of the people is left to the discretion of the Minister functioning with his board, but at such moments calmness of judgment is no longer possible, and hasty action is taken amidst the excitement of a crisis. This is dangerous. I think the Minister would do well to regard the suggestion of the hon. member for George as a valuable suggestion. Of course, it can only be brought about by legislation. I would, however, offer a few other thoughts in this connection. I believe it is highly necessary that the ordinary citizen, including the representatives of the Labour Party, should arrive at the basic, fundamental realisation that credit is never created, that it must be earned, either by way of assets you have or services you render, but it must be earned. It cannot be otherwise. Credit signifies nothing else than a belief in the fulfilment of obligations by the party who has undertaken them. How can anyone strengthen that belief if his promises are such that they cannot be carried out? It signifies merely that he has given false tokens of value. We must teach the people that credit cannot be created. Otherwise we are undermining the capital of the people and the upbuilding of the people. In the second place, it must be fixed by repetition that every individual member of the House and the people themselves must realise that the best credit can be formed by way of savings. There is no better way of creating credit than by services and by savings; and the function of the bank is merely to transfer credit. That is all that your commercial bank does. There is one thing further I should like to say. I am grateful that the Minister, if I understood him aright, stated he was not prepared to adopt the suggestion, made by the hon. member for George, to extend the powers of the Reserve Bank in order that it may function as a commercial bank. I am sorry that I have to say this in his absence. The Reserve Bank has certain powers to grant short-term credits, to discount bills, particularly connected with agriculture—these are necessary functions the Reserve Bank must perform both for credit control and for assuring that agriculture is given credits when necessary despite the existence of the Land Bank. But when the hon. member for George wishes to entrust the Reserve Bank with the functions of a commercial bank I must say I am dead against it; I can see no justification for it. If the commercial banks misuse their position, if they ask too high an interest or if they act unwisely, let recourse be had to those powers the Minister has to extend the powers of the Reserve Bank or to keep the other banks in check. But to establish another bank, to permit the Reserve Bank to function in the sphere of commercial banks, there can be no advantage in that to the country unless it is designed to penalise the commercial banks. The commercial banks function well, and the idea present in the minds of some hon. members that fortunes are made out of banking—well, I have no knowledge of the days of the sixteenth and seventeenth century, but today it is not true. If there are services that today are reasonably rendered then it is in banking. When you take into consideration the services the banks give and the costs connected with the administration of banking there is very little that can be credited to interest on loans; it is services that are rendered. I would just say a few words in reference to the suggestion of the hon. member for George (Mr. Werth) in regard to the sale of gold. I know it is a matter that is now enjoying attention. It is unsound that the disposal of gold should not be through your own central bank. It is unsound seeing that the central bank has been instituted to exercise vigilance in regard to credit loans and inflation and deflation. This ultimate currency for the adjustment of international balances must be placed in the hands of that body. Furthermore, not only are balances adjusted but the international exchange depends on the position of gold, and seeing that our future is clouded and seeing that South Africa, according to the Minister himself, wishes to play a part in the future in the promotion of world prosperity, South Africa can do a tremendous lot if it remains the holder of its own gold and if the disposal of its own gold is left in its own hands, and I trust that the Minister will take this factor into consideration. Whether it requires legislation or not, it is not in the interests of South Africa that one of our principal products, that this important medium of international payment should be taken out of the hands of the central bank by way of an agreement, no matter with whom. The Minister will recall that in 1923 a sound policy was laid down under which South Africa was to control and to ship its own gold. I think it was a sound practice, and seeing that we are now entering a difficult period I think it is necessary that South Africa should lodge its claim that this important element of international currency as well as of exchange should not be taken out of its hands. We wish to function in the world as one of the nations desirous of maintaining commercial peace. It is necessary then that we should have these powers. It is lowering our own dignity to enter into such a contract; I know it was a war measure, but in any case this must not occur in the future. In this connection I would also say that it is also dangerous that this important element of international trade should be placed at the disposal of a group who do not want to serve the world.

The Minister of Finance has evidently got the idea that when the Labour Party speaks about a State bank they are wasting his time and wasting the time of the House, and he has been at great pains this afternoon to attempt to ridicule our present exertion on the ground that it has all been done before; it has been done in a different way and therefore he thinks that we were rather confused, and he does not see any reason why this matter should be dealt with at the present time. The Minister of Finance has always made great play of the contention that as a matter of fact, in this matter of the control of finance, and in regard to banking generally, in South Africa we lead the world. That is a most self-evident illustration of the complacency of the Minister of Finance. He knows in his heart that South Africa does not lead the world.

I did not say that.

He knows that revolutionary methods have been applied to banking in other parts of the world which certainly throws out any suggestion that South Africa leads the world in the matter of finance. He may be able by his eloquence to persuade the shallow thinker that Britain follows South Africa. But the difference between the Minister’s assertion and the facts is bound up with the kind of conclusion you reach when you read the motion we have moved and when you place the Minister’s construction upon it. May I claim your indulgence to read the motion once more—

The Minister in some mysterious, logical process of his own, has placed upon this motion the meaning that the Labour Party would do this if they had the power to do it. That is not the meaning of the motion at all. We have learned by the hard road that the only way you can make any dent in the case that is put up by the Minister of Finance is to suggest to him in increasing tempo the suggestion that he might be prepared to listen to, and we have never claimed that a motion of this kind embraces the possibility that we envisage in regard to banking and control. We are only satisfied that it may be possible to persuade the Minister of Finance that he might do this. So all his reference to history is in vain. His attempt to ridicule us because he quoted history falls upon ears that are not receptive because we do not intend to be persuaded that that is the approach to this matter. It is a very serious matter. The Minister may quite rightly differ from us. If his thoughts are not educated up to it, we cannot blame him for differing from us, but he must not suggest from his superior height, which he has allocated to himself, that we are wrong because we are not prepared to accept that as a dictum. At the end of his remarks he said practically in the same words as one of our spokesman had said, that the question of the stability of finance rested upon the productivity of capital and labour, and we do not quarrel with him on that score because we have made the same statement. I think it is a statement that is generally accepted. The capitalist, however, wants to prove that you must keep the capital system of private profit in order that you may get a true kind of partnership. We on the other hand say that you must broaden the basis of comfort amongst the workers and restrict the ability of the individual to make profit, in order to bring about the best state of affairs. That is where we differ, and it is a wide difference. You cannot sweep aside our references to the need for a State Bank by merely saying, as the Minister did, that in effect the arrangement we have with the Reserve Bank is the very thing that the Labour Party wants, because standing in the background there are all the powers that would enable the Government to do a certain thing. That may be true too, but if that were true, we would accept the Minister’s statement at its face value. Let us suppose those assertions are true. But our quarrel with the Minister is this, that when he speaks about those powers, and when he tells us that it is impossible for the Reserve Bank to pursue a policy that is different to the policy of the Government, he knows he is speaking with his tongue in his cheek, because we make the assertion that in effect when it comes to a show down the policy of the bank is the policy of the Government, and it is not a case of the policy of the Government being the policy of the bank. That is the difference that we make there. We cannot agree in the fact of this reluctance to accept that the Reserve Bank shall become the State Bank, that really there is no difference. If the Reserve Bank were a State Bank, then the question of the power to do those things that were necessary in order really to control currency and credit, would automatically rest with the Government. There would be no question of saying to people in the background that there are provisions that we can from time to time use in order to curb a situation that might get out of hand, because that is the Minister’s approach to the matter of the Reserve Bank perhaps getting out of hand. He talks about reconstituting the board; he speaks of the Government appointing the Governor; he speaks of the deputy-Governor appointed by the Government. Then he speaks of the people appointed by the various interests, and he asks us to admire this set-up and to agree that these interests should be represented, and then he says that if those particular interests did at any time show an inclination, which they have not done for the past 35 years, to dictate to the Government nominees and the Governor, what should be the policy of the Bank, that we have the power behind us and behind that again we have the power of the Governor-General. We do not see it in that light. We are convinced because of the hardness that facts teach us that the Governor-General is merely a figurehead in the matter. The Governor-General will do ultimately what the Government asks him to do. He will not initiate anything in that regard, and when the time comes in the opinion of the interests that are represented on that board to exert their power and to say “We think the position looks very dangerous from our point of view”, I am quite sure on the present arrangement that those interests could very easily peruade the Government to accept their point of view and automatically again the policy of the Bank would be the policy of the Government. Of course it would; but only because the Government was persuaded to accept the policy of the interested parties. Now where does the man in the street come in in these banking arrangements? He has no say at all, neither in the ultimate instance does he derive very much benefit, because we are persuaded that the best thought in this country and in every country is convinced that there is something very much wrong with what is called the orthodox conduct of high finance. It is not a question of a few hot-heads insisting from time to time that it is wrong. It is a question of scientific assertion that there is something wrong, and unless a real attempt is made to reorganise our arrangement in the realm of high finance, then the total economy of the world and not only that of South Africa is bound for ruin. That is the conclusion that many people who cannot be called socialists have come to, many people who are not prepared at the moment to accept our dictum that the Reserve Bank should be a State Bank, and I want to quote a very telling little illustration that was given by a man who was a capitalist in regard to the attitude of the bank towards a person wanting to borrow money. The hon. member for Fordsburg (Mr. Burnside) made the point in another way this morning. It was this; he said the approach of the man who needs money to a bank is like the approach of the man who needs an umbrella to the man who sells the umbrella. It is raining; the man who needs an umbrella goes to the shop and he wants to buy an umbrella. Now he said: Would it not be perfectly ridiculous for the man in the shop to say: “I cannot sell you an umbrella because it is raining; you must come on a fine day and then I will sell you an umbrella,” and then he went on to illustrate how this was a parallel case with the attitude of the bank towards the person who wants to borrow money. A man who wants money to further his legitimate business goes to the bank manager. He would not want money so urgently if there was plenty of money available. He goes to the bank manager, the bank manager says in effect: “I am sorry, it is raining, I cannot lend you an umbrella; come along when everything in the garden is fine and sunny then I will give you an umbrella.” In other words, when there is a depression on you cannot get a loan, but when there is no depression you can get as much money as you want. This illustration given by a perfectly competent authority to illustrate the way in which the banking system works, I am quite sure, is borne out in practice in the experience of many business men in this country. They have gone to the bank at times when they have needed money for a legitimate enterprise, as they put it, and the bank manager has met them with a very blank look.

Instead of giving them a blank cheque.

He has wanted security beyond the ability of the man to put up. So the man who wants money to do a job of work cannot get it. That has been the experience of many people who believe in capitalism in South Africa. I want to say that that kind of high finance is the kind of finance that seeks refuge in the market that brings the greatest profit, and even the Reserve Bank under its present control would not be above persuading the Government that they should seek overseas the most profitable market for their credit. As we know, it has been done by the Bank of England. The Bank of England has made England suffer many and many a time because it would insist on investing British capital in parts of the world where labour was cheap and where the profit was great. We know that British capital was invested even in Germany. That is something that has been well brought home to the members of this House. British capital has been invested in Germany even to the point of endangering the very life and the safety of the British Isles themselves, by giving work to Germany. They have done that consistently, to the hurt of the English people. We know that that policy has meant the closing down of mills in the cotton areas of Great Britain. It has meant the opening of mills in India and in China and in Japan where wage levels are so ridiculously low that the British employees were not able to compete, and it has meant that in places which claim to be the origin of the industrial revolution, which claim to have been the first home of the modem machine, to have obsolete machines; you have mills totally out of date still trying to work against mills in India, where nothing was known of mills before the Europeans had brought it there, and mills in China where only the hand loom was known, and in Japan where everything was done slowly and laboriously by human labour, and where today you have the most modern machinery supplied through a banking institution known as the Bank of England. And if South Africa had been in similar circumstances I do not doubt for the moment but that the Reserve Bank would not hesitate in its present composition to see today that this money was invested where wages are lowest and where the profit is the greatest. That danger, fortunately, in the case of Great Britain is now on the way of being eliminated. We are not concerned to argue too closely the matter of how the Labour Party is going to do it in Great Britain. We realise—and I think the hon. Minister of Finance realises—that it is not so easy in a highly complexed civilisation such as has been built up in Great Britain to change an institution that has been rooted in the customs of the people for hundreds of years. But here, where the fact of civilisation has not yet percolated through to the vast majority of our citizens, here we find a particularly fruitful field for the trying of the experiment, and that is why we insist that this matter should be kept before this House and before the people of this country. It cannot be claimed by anybody in this House that the mass of the people of South Africa have received any benefit at all from the operations of high finance in this country. It can be claimed that even the people who are comparatively well off have from time to time suffered very badly because of these operations; because of the lack of control that exists over the ramifications of money and its investment. And we make the assertion boldly, in spite of the hon. Minister’s displeasure and in spite of his high and mighty attitude, in the matter, that if he hopes—and sometimes I doubt whether he hopes—if he hopes to put into practice the plans that we have heard from time to time, the plans that are being prepared for the good of the people in this country, if he hopes to put them into practice, the one thing that will be necessary above others is that the State should not only talk about control in the way they are supposed to exercise it today, through the Reserve Bank, but that the State demonstrates that control in a sane and considered fashion in a bank that is needed and controlled by the State. Of course, we know that the Government can suggest to the Reserve Bank as to the number of notes in circulation, and I am quite sure that ordinarily the Reserve Bank is prepared to listen. We are not talking about that kind of control. We are talking of the ultimate control that relates currency and credit to the possibility of production in the country, and we say that one of the chief features of reconstruction, which is summed up in the term “full employment,” is wrapped up with the full use of our resources, of our discovered resources. We have discovered our labour resources, but it is generally agreed that we do not use a great part of those resources, and I think we agree, too, that we do not use a great part of our resources. We have discovered very often to our hurt through the agency of private enterprise mineral resources that are not worked because it is said it is not economical to work them. But the fact remains that only the application by the State of the means of currency and credit that is necessary to put all those people into work on all the resources of the earth that we have discovered will lead to the reconstruction that we hope for, and we say that the time has come when, if we are to quote our case against the case of any other country in the world, the Government should demonstrate that it is prepared to allow civilisation to percolate right through to the broad masses of humanity which at the moment in South Africa are as barbarous as they were three hundred years ago—and I do not use the word “barbarous” in any disrespectful sense. I merely use it in the sense that they are wanting to live in the same way they always lived, and they are restricted from doing it and compelled to eke out an existence in an unproductive way. We say that notwithstanding all this that is said against our attempts to bring this to the notice of the Government, the only efficient way in which that labour can be used to the full extent, in which our resources can be developed, is to bring into being and control a national bank, to make it a State Bank and to control and issue credit and currency.

The hon. gentleman who has just sat down has not taken this matter very far. He referred to the harm that the Reserve Bank has done, the clash of policies that has taken place in the last few years. He made a very definite statement that on occasions the policy of the Reserve Bank has been detrimental to the State, but he did not give a single instance or quote in what way it had been detrimental to the State. The hon. Minister quoted that very specific case where the interests of this country and the interests which he condemned, the private banks, and all the business interests of this country, were definitely hostile to the Government’s attitude on the gold standard, and they did their level best to persuade the Government of the day to depart from the gold standard and to follow the example of Great Britain in that case. Not only were the financial institutions in this country in favour of that, but we also know that the Reserve Bank itself was in favour of it at that time, but it was the policy of the Government of the day to remain on gold, and it was supported by certain other interests.

But remember what kind of Government you are talking about.

I am talking of the Government of the country of that day. It was their policy to remain on gold, and whether it had been a Labour Government, or any other Government, if the Government decided to remain on gold, the Reserve Bank would have carried out that instruction. It is no good the hon. member suggesting that the present constitution of the Reserve Bank or the way in which it is operated is hostile to the declared intention of the Government or the policy of the Government. That is not correct; it is not true. The hon. member must not try to get away from the words he used. The statement was very clear, and I say most emphatically that at no time has the Reserve Bank acted in direct conflict with the Government, and at no time has it not carried out the policy of the Government. The mover of this motion referred with great pride to the measure of the Bank of England that has been passed by the present Government in Great Britain, and in the course of that speech he quoted in support of some of his arguments the speech made a short time before by Sir John Anderson, who was Chancellor of the Exchequer in the last British Government. He quoted it as an authority on this particular point he was making. I ventured to smile, and at my smile there fell from the hon. member for Fordsburg (Mr. Burnside) the usual offensive remark one hears from the hon. member. But the hon. member for Berea (Mr. Sullivan) did not quote’ the speech of the ex-Chancellor of the Exchequer, Sir John Anderson, on this very important subject. Sir John Anderson was one of the persons in the House who condemned this measure root and branch. In his speech Sir John Anderson paid a very high eulogy to the way in which the Bank of England was run. The hon. member referred to the lines on which the bank was run, to the loans that were made having been to the detriment of Great Britain, to the detriment of the world and to the detriment of industries and trade. But the very loans the hon. member spoke about were made with the concurrence and authority of the Government of that day. If the Government of the day—we may condemn it, many of us do condemn it—made those loans, they were made by their authority. The same thing would happen if loans were required for any Dominions overseas. Do you think for a moment they would not be granted if the Government favoured them, or that they would not be stopped if the Government of the day wished it? It is exactly the same today. In regard to our loans I think no fresh issues of more than £5,000 can be made unless they have the concurrence of the Treasury. I think that is a very sound thing, to have big capital issues under a certain measure of Government control. I want to say this: I think it is a matter of very grave concern that a large number of capital issues are being made today in this country for concerns which many people believe are gravely over-capitalised. That, however, is another matter. A State bank would not help us in that. That is a matter for Treasury control, and is a matter I think the Government would be well advised to consider. I want to get back to this particular matter of the Bank of England, because they paid tribute to the part the Bank of England played in the advancement of the World, and the criticism there, different to the criticism in this country, is this. The objection to the nationalising of the Bank of England was because it had gone far beyond the ambit of England alone, because of the part the Bank of England plays in the sterling group, and it is because of the part Great Britain played in connection with the sterling bloc that what I might call the opposition were very gravely concerned about the nationalisation of the Bank of England. Mr. Churchill said there was not much harm in the matter and they were not very concerned, but they were concerned from an, international point of view because of the effect on other nations who did not understand British politics, and who might be seriously concerned at the measures going on in Great Britain. On this point of nationalisation Sir John Anderson said this on the Bill—

You would not believe that of Hugh Dalton.

It is perfectly true, as the hon. member will see if he will read the speech. The Labour Party said this was the first step in the Labour policy they were bringing before the House. That is quite a different matter to what we have here, and it is no argument for suggesting the nationalisation of the Reserve Bank of South Africa that they have had this nationalisation of the Bank of England. The other day when we were discussing some of these financial matters, Mr. Speaker, one of the great questions that came up was the question of bank rates. I think the hon. member for Berea said it should not be more than 4 per cent., from 2 per cent. to 4 per cent., and the only way to help farming and other sections of this country was that they should not be charged interest at a higher rate than 1 per cent., or at the most 2 per cent. Let us see how that is to be achieved. If you wish to finance and subsidise the various interests, whether farming or anything else, you have to raise your loans from the public, and your interest rate is 2½ per cent. to 3 per cent.

That is the position we are up against.

Very well, but what do you find? Take Australia and New Zealand which, if they are not socialistic States, have both Labour governments. As far as Australia is concerned they have had a Labour government in control for 20 or 30 years, at any rate for many years. In New Zealand there has been a Labour government for many years, for six or seven years. What do you find today even in Australia and New Zealand? When they want money for any of their essential schemes they go to the public and they are prepared to pay 3 per cent. to 3½ per cent.

No.

The average rate of interest for Commonwealth loan funds has been coming down steadily. At the end of June, 1942, the average rate was £3 5s. 1d. In 1942 a New Zealand 2½ per cent. loan was issued repayable in 1947-’49, and a 3 per cent. loan was issued repayable in 1953-’56.

Those were war loans.

They may have been war loans, but you have to pay more or less the current rate of interest whether it is a war loan or a loan for social purposes. The hon. member talks as if these were the only countries, but if you take our own Public Debt Commissioner’s report you will find £14,000,000 of 2 per cent. stock, repayable in 1951, and £12,000,000 of 2¼ per cent. stock. We have these low rate interest loans ourselves.

Why should 4 per cent. be payable for housing?

That may be 4 per cent. for interest and redemption. My point is this in regard to these loans. You can raise the money at 2½ per cent. and 3 per cent., but that is quite a different matter to the amount of interest you charge a person you are assisting. The hon. member says what we should do is to help farmers by charging 1 per cent. When the interest rate was 4½ per cent. the Treasury subsidised to the extent of 1½ per cent. of the Land Bank’s charge. The Treasury subsidised and assisted the farming population by reducing their interest rate by, I think, 1½ per cent. at that time. All along with the Treasury loans there is this assistance to farmers. It does not matter so much what you pay for the loans, the Government is prepared to subsidise, and to subsidise you have to raise revenue by means of taxation.

At 4.10 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with the Sessional Order adopted on the 31st January, 1946, and the debate adjourned; to be resumed on 15th March.

The House thereupon proceeded to the consideration of Government business.

When the debate was interrupted yesterday in accordance with the sessional order I was alluding to the necessity for a more acceptable name for those institutions created under the Bill. I referred also to the need for preventive measures with a view to checking or arresting the stream to our gaols, our reformatories and our work colonies. We must take preventive measures to ensure that people do not become criminals, and I was dealing with this aspect of the matter when the debate was adjourned. I want to say at once that if there is psychological observation and analysis of our youth by means of education, and if measures are taken to counteract the tendencies towards maladjustment and to lead them into the right channels, there is no doubt that the stream to our gaols can be checked, and that our gaols and reformatories and work colonies, most of which are crowded today, will have fewer inmates. If we turn to the reports of the Director of Prisons we find from the juvenile convictions that juvenile crime is increasing day by day. The result is that a large proportion of our youth find their way to gaols, reformatories and work colonies. I regret to say that as between the ages of 16 and 24, and the remainder, the numbers are equal. We must begin with the child, and then we must see to it that the father does not land in gaol, in an institution or a work colony. In this connection it may be of value to refer to a paragraph written by an expert in this subject. I refer to a book written by Dr. Gillian, a professor in philosophy. Under the heading “Development of a Social Personality in Children” he writes as follows—

The writer goes on to point out that we can employ experts to lead the children psychologically along the right channels. It does not admit of doubt that we must use experts. The Department of Social Welfare is still a young department, but permit me, Sir, at this stage to say that we can congratulate the department on the very fine work it is doing. This department is doing a great service to the State, and this service will become larger yet should it function in co-operation with the Education Department in taking in hand abnormal juveniles and seeing to it that instruction is given that has a basis in psychology and science. Have we ever taken note of the expenditure incurred by the State on the various institutions that are necessary for deviate juveniles and adults? Have we ever investigated what the expenditure of South Africa is in connection with persons who suffer not only from physical but also from moral defects? That expenditure has mounted tremendously. During the period 1939 to 1944 it rose from £198,000 to £213,000. Unless we take steps to devote attention to those who are morally less developed persons and restore them as useful citizens of the State I fear that this process will impart a tremendous shock to the whole economic structure of the country. That is perhaps a very strong proposition. I do not know whether a calculation has ever been made in South Africa of what our penal institutions cost us. But I have here a report from America, and therein I find the following: “The total federal cost under criminal justice amounts to 52,786,000 dollars.’’ This is the expenditure in America in connection with crime. In a young country like South Africa we must check that tendency. It is not open to doubt that the Bill now before the House is an attempt to do this, but I feel that we must start much earlier still. We should not wait until the citizen is dragged into the magistrate’s court and then lands in a reformatory or work colony or even in gaol. I repeat, care for the girl and the boy and you will not have the father as a criminal. One cannot stress that aspect of the matter too strongly. Preventive measures must be adopted to take the youth of the country in hand. It is the easiest thing in the world. At our schools education must be based on a proper psychological foundation. We have never done that. We have never kept a proper register of our children or made a proper study of them in order to ascertain what tendencies they have and what are the directions in which they would like to strike out. The child is sent to school; a whole lot of mathematics and all sorts of things are stuffed into him, and not enough attention is paid to character formation. That is an aspect one cannot stress too strongly. Now I come to the treatment of the patient after he leaves the work colony. This is the second important aspect of the effect this Bill will have. In this connection I cannot employ a better argument than is contained in a few words used by Judge Krause. He has written various brochures on this subject, and in one of them I find the following—

That is the whole crux of this matter. The punishment we may give today for a first offence is one of the great causes of backsliding instead of it being directed towards the improvement of the individual. One of the main reasons is that no proper provision is made for the individual when he leaves an institution. When such a person leaves a gaol or an institution he is regarded as the dregs of civilisation; everyone regards him in a humiliating way, but however bad a man is he still has a little sense of honour left. If we proceed with this Bill on that basis I fear it will totally fail in its purpose. This is the second aspect, the treatment of the patient after he has left the work colony. It is true, reference is made in the Bill to hostels to which the patient can be sent when he is discharged from the work colony, but nowhere in the Bill do I find a provision that measures must be taken to assist that man economically and to place him in employment. If we want to make real provision that the man who is sent to a work colony is socially rehabilitated it is highly necessary provision should be made for his economic rehabilitation. Then reference is made in the Bill to certain work the inmates of work colonies will do. I am confident the Minister will realise that these people should not be made to do any sort of useless work. The difficulty with which we have to contend in this House is this. We pass a Bill, perhaps with the support of all sides of the House, and then we leave it in the hands of bureaucrats and no one knows what becomes of the thing. When this House sends a Bill to the Senate it is sent back by the Senate and signed by the Governor-General, but then it is still only the framework. Flesh and blood is put into it by the people who administer it, and it is on the administration of a measure such as this that its success depends, bearing in mind what is meant by this House in that regard. Lads may come to such a work colony who have no trade.

Lads will not be sent there.

After they are 19 years old. The hon. member and I are still lads (seuns). Let us say that a young man comes there. He has no fixed trade. The biggest failures in life occur perhaps in the case of people who have taken up the wrong trade or calling; they may have had to. People have perhaps no fixed vocation and they cannot make a living. Eventually they arrive at the work colony, and we want to express the hope that the time they have to spend there —the one, two or three years—will be used to teach them a useful trade so that when they leave the work colony they will be able to rehabilitate themselves economically. Supposing that a person is placed in a work colony and wishes to become a carpenter. He has never had the opportunity to go to a trade school or to be indentured to a carpenter; he is an ordinary labourer and he cannot eke out an existence. Give him opportunity then while he is reforming to prepare for rehabilitating himself economically. Give him a new start in life, so that he will be able to make his living. If we do not take these preventive measures I fear that the good object of this Bill will be completely lost. With these two general observations—the first in connection with preventive measures to guard against people having to be sent to institutions, and the second in connection with the treatment after they leave the work colonies—I want to turn to some special features of the Bill. In the first place I should like to refer to the administrative aspect, because administration is one of the most important factors in connection with the whole structure of work colonies. It is of extreme importance. It will depend greatly on the type and class of man you place in charge of such a work colony whether the effect on the patient will be what we envisage, and whether that patient will derive any benefit from his stay there. If we send laymen there such as we have in our gaols, people who perhaps have barely passed Standard VI, and who have charge of a prisoner, we shall not make a success of our work colonies. If we want to send laymen there to exercise supervision over these people I fear that this afternoon we might just as well reject this Bill. We must have experts who understand the work and who have been trained to carry it out in a scientific way. The Minister knows his Department better than we do. The hon. member for Newcastle (Mr. Robertson) stated there was a shortage of staff and especially trained staff. Our universities have now for quite a few years had faculties for the training of social workers, and we must assume that that class of person is being trained and that the universities will see to it that they will have sufficient numbers to train.

There are quite enough trained people, but the salary is too low.

That has also been stated by other members. I am not worried about the salaries. The whole matter has been investigated by the Centlivres Commission and we can only express the hope that the salaries will be such that people will be attracted. It is of vast importance that we shall have experts to handle the inmates of work colonies. In this connection I would also refer to clause 34, namely the disciplinary action while these people are inmates of an institution. I refer to clause 34 (b) (iii), (iv) and (v). These sub-sections are in my opinion not at all in harmony with the institutions we have in our mind’s eye. Reference has been made here to solitary confinement, forfeiture of meals, and increased hours of work as punishments. Just imagine it. These are people who have come to you voluntarily or who have been entrusted to you, and those people who are responsible for the drafting of the Bill have apparently had in mind gaol conditions. We do not want that. That is directly in conflict with what we contemplate. We cannot help these people psychologically and then give them spare diet and more work.

Nevertheless, you cannot entirely replace penalties by pedagogy.

Penalties such as those mentioned here are directly opposed to the psychological trend of the whole Bill. All the good intentions of the Bill will be foiled by this sort of disciplinary action. Then I refer to the right of appeal. Under the Bill the person who is convicted is only allowed an appeal to the superintendent just as in a gaol. At the moment an investigation is being carried out in Johannesburg and elsewhere into penal affairs. I am convinced that the recommendations of that commission will make for big changes and improvements of the whole system. But here we are going to work in the old style. We ought to give a person if he has done wrong, the right of appeal to the board of management.

An appeal against what?

Against the decision of the superintendent.

What decision?

In connection with any complaint. For example, the superintendent may take disciplinary measures under clause 34, and the fellow may feel the superintendent was not justified in taking these steps. Then he should have the right of appeal to a higher authority. Do not forget that these people are usually mental cases who are misfits in the whole social structure, and these people feel under a sense of grievance, they feel that the whole world is against them. They come to a work colony and there is no one to listen to them.

The superintendent will not listen to them, there is no appeal. That man should be able to feel that he has sympathetic people placed over him who will listen to him and assist him. He must feel that he is being treated in the right way, that his grievances will be attended to and that there is sympathetic treatment. If we apply a prison system the good intention of the Bill will be baulked, but if we succeed in giving them good, expert, and sympathetic treatment this measure will represent a big step forward in the path of social and economic reform in South Africa.

I have listened with interest to various hon. members who participated in this important discussion. I do not intend pausing to criticise their speeches. I think that the debate was throughout maintained on a fairly high level. The hon. member for Roodepoort (Mr. Allen) said that there was a very comprehensive memorandum circulated amongst members in connection with the measure. I feel that it was by far not as comprehensive as we should have expected. We are dealing with a revolutionary and comprehensive measure, and we expected that the Minister’s Department would at least provide us with a detailed memorandum. I am of opinion that in Holland they issue a memorandum containing information dealing with the details of such an important measure. Also the introductory speech of the Minister was no wonderful contribution in the sense that he gave a detailed explanation as far as this measure is concerned. I do not wish to cast reflections on the Minister, but only wish to draw his attention to that by way of introduction. I wish to express a few thoughts and especially to stress that the State should not think that once it has taken a man into custody and placed him under protection, it has done its duty. I think the main duty of the State really starts after it has banned a criminal from society, and specially in this connection this Bill casts a very great responsibility on the State. The State has not only a duty towards society, it also has a duty towards the offender as such, and in this connection I cannot enough stress the importance of this legislation. There are people who think that when once a man has been taken into custory that finishes the matter, but the Minister here bears the great responsibility which is thrown on national welfare to afford decent treatment to such a person and to see that in such treatment they will use those measures which will tend towards the rehabilitation of such persons. Seeing that that is the aim of the Bill, it is in agreement with the primary idea of our penal system. That is not only to prevent but to heal by means of efficient punishment. These persons will, I presume, later be set free, at least 75 per cent. of them, and they will again live as members of society. If one wants to prevent these people again reverting to crime, it is essential that when they return to society, they should receive special treatment. The aim should be to combat crime in an efficient manner. The Minister in his speech tried to compare the old Work Colonies Act, No. 20 of 1927 with this Bill, and he tried to indicate the great improvements embodied in this Bill. I do not want to enter into that, but it is enough for me to say that the Work Colonies Act, No. 20 of 1927, already to a certain extent envisaged the new direction in the penal system. It is a pity that the old Act to a certain extent led to limitation and inelasticity and shortcomings and faults, with the result that it did not have the desired effect. Act No. 20 of 1927 was not applied by the courts. The great ideal to be attained by means of this legislation is rehabilitation, and it was not attained to any great extent by the Work Colonies Act of 1927. The draftsmen of that Bill were disappointed in their expectations. For that reason I want to tell the hon. Minister that we welcome this Bill before the House, not only because it is comprehensive and more elastic, not only because shortcomings and faults in it are removed, but we welcome the Bill also because it contains certain basic principles and aims at certain new ideals which in my opinion are quite in accordance with the modern penal system. Let us, for example, examine the aims of the Bill. The results aimed at in the creation of work colonies and institutions is the spiritual, mental and physical improvement of this socially maladjusted type of person. These aims, as viewed by work colonies and institutions, make one involuntarily think about the principle of a sound educational system. Because the rehabilitation of the unfortunate maladjusted person is nothing else but an educational problem, and therefore I am so glad that we have this Bill that I do not so much want to criticise during the second reading, but prefer to take the Bill into review from the point of view of the great aims of the Bill as such. We are not dealing here purely with a prison. We are not dealing here with the cold atmosphere of a prison; we are dealing here with work colonies, and thank God these work colonies are educational institutions. The main object is not to segregate these unfortunate maladjusted persons from the rest of society, but when they have been removed from society to bring it to their understanding that they are not being punished, but are receiving an ideal opportunity, that a beautiful opportunity is being offered them, so that they can develop and be cured and be completely rehabilitated in society. I want to tell the Minister that we on this side welcome the Bill in that spirit. To us it is a comprehensive and revolutionary measure. Punishment is not the chief aim, but the idea of punishment is being replaced by the educational principle, which is an innovation in the penal system of South Africa. This unfortunate being might have contravened the laws of the country, but let me tell the Minister and the House that although the man has contravened the laws he is still a human being and can still claim to have human rights. For that reason we do not want to treat these people in a manner which frightens them, and we do not wish to use them in order to frighten others, but we want to treat them as human beings, as the peak of God’s creation, and we want to give them another chance of being rehabilitated in society. And that is what is so beautiful about this Bill, and for that reason we welcome the measure. A second thing I find good is the classification of these unfortunate persons. There will be psychiatrists to diagnose these people and to prescribe the proper treatment for them. As far back as the international congress in London in 1925 dealing with crime and punishment, we find that the question dealt with there— it did not deal with work colonies but with penal punishment—was whether it was desirable to create laboratories and clinics in certain prisons to make a scientific study in order to throw light on the causes giving rise to crime, and in that way to determine the proper treatment for the individual offender. What was the reply to that? The following resolution was adopted—

In this Bill we do not approach these unfortunate beings only from the human point of view, but also from the scientific point of view. We want use to be made of those measures at our disposal to rehabilitate these people. We want a scientific study to be made not only of the factors of heritage and the influences of environment, but also of the physical and spiritual factors which are responsible for the behaviour and maladjusted persons. And the importance of the Bill lies herein that reference is made to the necessity for diagnosing such people. Diagnosis and effective treatment are inseparable from each other. What use is it to put a plaster on the foot of an offender who suffers from cancer of the heart? Therefore I say that it is essential to combine diagnosis and effective treatment. That will be done by means of the provisions of this Bill. There should be a diagnosis of the problem type, upon which effective treatment should follow which might lead to the improvement and rehabilitation of the offender. I regard this as an important Bill. I do not want to expand on what has been said about classification, nor do I wish to discuss the criticism directed at this Bill. I feel that the matter raised here can be dealt with in the Committee stage by way of amendments. I feel, however, that I should like to touch upon a few matters in passing without going over the same ground covered by former speakers. There are people who are in earnest about this matter who put the question: What is to happen to the families of these unfortunate people? They are concerned about that. They ask themselves what will happen to the family of the man who is to be rehabilitated. I also want to put the question: what will happen to the children of these unfortunates? Clause 29 gives the reply to that question—

1. (1) Subject to the provisions of sub-section (2), allowances may be paid to inmates of work colonies or retreats in respect of any work performed by them while they are being detained therein.
2. (2) The rates of such allowances, the classes of inmates to whom they are payable, the apportionment of part of such allowances to the dependants of the inmate in question and any other conditions attaching to the payment of such allowances, shall be provided for by regulation.

I now want to ask the Minister whether he considers these allowances, part of which is paid to the family of the unfortunate person, as being sufficient. Can the Minister tell us what the allowances are that are paid under the regulations? Unless I am mistaken these people receive only about 2s. 6d., of which perhaps 2s. 3d. go to the family of the unfortunate man. Does the Minister think that this allowance places that family on a sound economic basis? I will tell the Minister that by paying an allowance like that he is allowing 95 per cent. of the families to go under. I therefore feel that I must press for it that the Minister should give consideration to this point, i.e. the position of the family of a man detained in a work colony. I feel that at the Committee stage, we shall have to move certain amendments in this connection, and it may be that we shall have to say something more about it then. I am glad the point has been stressed in the House that such a person is not to be rehabilitated as an individual, but as a member of a family. When one reads the Bill, one receives the impression that too much is said about the individual and his treatment, as if one is just dealing with an individual.

That is not the position. Not enough stress was laid on the individual as a member of a family. If you want to have complete rehabilitation, you will have to take the family into consideration. It is a well-known fact that the family is the oldest unit of society. It is in family life that duties and privileges were evolved, it is there where altruism was born; the family is a State in miniature, and the State consist of a large family composed of various families, and if one wants to rehabilitate these people and take them back into society, it is essential to pay attention to the family bond and to rehabilitate these people within the family bond. This is certainly one of the weak points of the Bill, and we hope that in the Committee stage it will receive more attention. Another point which perhaps has not been touched on is that I would like to direct the attention of the Minister to the role played by private initiative in connection with this matter. I feel that if there is one direction in which the Minister should concentrate, it is on the question as to how far we should take into account private initiative. Nobody denies that a healthy welfare policy can be based on voluntary efforts and individual initiative. But we are dealing here with a specialised direction, a scientific direction, and it is the State which has at its disposal large-scale facilities. It is a scientific and expensive direction we are dealing with, and therefore the State should take the lion’s share. If the State wants to make use of individual initiative and wants to recognise it as such, the State must also see to it that those individuals are able to make use of expert personnel in their institutions, so that they will set to work in the right way in order to attain complete rehabilitation. I should be glad if the Minister in his reply will tell us how he is prepared to deal with private initiative without detracting from the desired results we are aiming at. We are adopting an expensive and a scientific method, and for that reason the State must take the lion’s share in it, because it has the facilities at its disposal. It is the duty of the Department as far as private initiative is concerned to see to it that psychiatrists, psychologists and sociologists are made use of in order to give the right treatment. I shall be glad if the Minister will devote his attention to that. Much has also been said about what will happen to these people after they leave the work colony. These people must be further rehabilitated. There should be a certain degree of supervision. In the work colony they were under the supervision of experts, psychiatrists, sociologists and trained people. Today there are also people outside who have had training, professional people who know how to treat these people psychologically, but it is an important question who will supervise these people who are going to be rehabilitated. What method will you adopt? I should be glad to hear from the Minister what method he will adopt in connection with the appointment of trained personnel in the work colonies and in connection with after-care. Will the people in the work colonies be professional men who have had the proper training? After having expressed these few thoughts, I just want to add that we welcome this Bill not because it is perfect, but especially because it contains the great principle that the educational system will be introduced into the penal system. For that reason we support the Bill, although perhaps in the Committee stage we shall have to move certain amendments, in order to try to improve the Bill, so that when it is adopted it will be an ideal measure.

I am glad of the support given to this measure by the hon. member for Brits (Mr. Potgieter). It does show that the House is not treating this Bill in any party spirit, because I think the House in general realises that it is an honest attempt to deal with a very difficult problem. It it an honest attempt on the part of the Minister and of the Social Welfare Department to deal in a sympathetic manner with these unfortunates and those problem types that the hon. member for Brits referred to, and whom our social system, as it is at present constituted, is only too apt to overlook. To that extent both sides of the House welcome this Bill, and more particularly the spirit behind it. For that reason, if no other, I find it regrettable that such a storm of controversy should have blown up outside about certain elements of this Bill. I regret that more particularly because there is no doubt that this Bill has been very carefully considered. The Minister has told the House that it was re-drafted four times. It was sent to the Provincial Administrations, all of them, the Department of Public Health, the Department of Native Affairs and the Department of Labour. What is even more important in reply to a criticism made by the hon. member for Durban (Berea) (Mr. Sullivan) that there were no experts consulted in connection with this matter, let me tell the hon. member that the Bill even went to all the superintendents of all the mental homes in the Union. I think all of them held a meeting, and if anyone should be an expert on this matter of psychiatric treatment, it should be the superintendent of a mental home. All of them carefully considered the Bill, especially the clauses dealing with the classification of inmates, and the meeting unanimously decided to support the Bill without any amendments. I have laid particular stress on this support of the Bill’s measures to deal with the classification of inmates, because that is one of the points on which criticism from outside has been directed against this Bill. The difference between those outside and the people who support this Bill is this: This outside suggestion is that an observation centre should be set up to which every person committed by a magistrate should automatically be sent, quite irrespective of the kind of person he is, whether he is a drug addict, an inebriate, a won’t work or whatever he is, but everyone should automatically be sent for observation, whereas this Bill recommends instead as put forward at the Select Committee that the Minister should be empowered either to set up a special work colony or alternatively special sections in a work colony wherein everyone who by his behaviour in the work colony indicates that he is need of special observation could be so specially observed.

But will not that be done?

No, because in many instances the people who are committed quite obviously show from their casual behaviour what type of person they are. The confirmed drunkard is quite obviously a confirmed drunkard, and if he is sent to a work colony for confirmed drunkards, and if there he displays other symptoms, then an opportunity is given to the Minister to send him to the observation centre in the work colony. That is the sole difference. It does seem to me that the measure recommended by the Select Committee and adopted by the Minister is the much more practical solution of the problem, not to mention of course the difficulties which were stressed by the hon. member for Newcastle (Mr. Robertson), difficulties of staff and difficulties to provide enough psychiatrists to set up an observation centre to deal with these people. While I am on this point I would like to suggest to the Minister that he should perhaps adopt an amendment suggested by the Social Welfare Group to section 12 (1) that the staff of the work colonies should give special attention to the mental and psychiatric condition of the people committed; in other words that the Minister should consider attaching to the staff of each colony a trained psychiatrist to deal with those people. That would in fact give what the people outside want. We would have every inmate of a work colony under psychiatric observation. I hope the Minister will accept the amendment suggested. That would be the test. I hope the Minister will accept the amendment, as suggested by the Social Welfare Group, to clause 12. The other point in which people outside disagree with the recommendation of the Select Committee and with the Bill is that they want special hostel accommodation for the wives and children of those people who are sent to work colonies. What is suggested by this Bill is that children in need of care should be taken care of by the normal agencies set up in the Children’s Welfare Act. That is they should be regarded as children in need of care and the Children’s Act provisions dealing with such cases should begin to function. I had an open mind on this matter, but I am inclined to think it is a very much better thing to deal with the wives and children of the inmates of work colonies in their normal environment. If you put them in special hostels, if you have special accommodation for them, the result will be that they will be placed in some kind of artificial environment, a kind of hot-house atmosphere, while the whole purpose of the Bill is to rehabilitate the inmate and his family so that they shall be able to take their place in the normal social environment. For that reason I would not be prepared to accept as yet such an amendment as has been suggested from outside. I think the course suggested in the Bill is far wiser, more especially in view of building difficulties. One of the points raised from outside is on the question of the various memoranda submitted to the Select Committee. There was a kind of suggestion that the Select Committee was suppressing some of the memoranda because they had not been published. I for one would have supported the publication of all the very useful memoranda that were submitted to the select committee, if only because this would have enabled the House to read them. But only one of those responsible for the memoranda gave evidence before the select committee and only one memorandum, and the reason for this is set out in the select committee’s report. At the end of the report in Section 44 the chairman says—

The result of that was that the person who gave very full evidence appeared to speak for all the organisations, and the amendments suggested in the other memoranda were in the main similar. It is a pity all the memoranda were not printed, and I would ask the Minister to consider whether it is now too late to have them printed.

It is a matter for the House to consider, it has nothing to do with the department.

I should like the House to consider whether it would not be advisable even at this late stage to have the memoranda printed as an addition to the select committee’s report.

Did they give full consideration to them?

Oh yes, they gave full consideration to the various memoranda. As far as I am aware the question as to which memoranda should be printed was not put to the committee but it was decided in the usual way by the chairman. I should now like to deal with another point put forward by the hon. member for Durban (Berea). He put forward the suggestion that it should be incumbent on all employers of labour to engage a certain quota of the rehabilitated inmates of work colonies. That is indeed a difficult suggestion to enforce. At the present stage I am much more in favour of suggesting to the Minister that such inmates should on rehabilitation be given some form of sheltered employment, as we have been doing under our demobilisation scheme in respect of men who, on account of some physical injury sustained during the war, cannot stand up to the ordinary competition of the labour market. I would suggest that the Minister gives a chance also to the casualties of our social system by providing them with sheltered employment, at least for a year or two, and then once they have proved themselves competent under a sheltered employment scheme it would be the time for them to endeavour to meet the competition of the ordinary labour market. I suggest that to the Minister. Then there is one other thing, and here I agree with the hon. member for Berea. I am not altogether happy about this question of access to the board of management. I, too, feel it should be embodied in the Bill rather than merely in the regulations; and at a later stage I propose to move such an amendment —that there should be access to the board of management. I propose to move that a clause to that effect should be included in the Bill, but that the regulations should provide as to how that access should be proceeded with. I trust when I do move such an amendment the Minister will be prepared to consider it favourably. The hon. member for Cape Western (Mr. Molteno) suggested it was a pity that this Bill has come up when it has done and that it did not await the report of the commission now sitting on penal reform. I am inclined to agree with him that in all the circumstances it might perhaps have been better had this Bill come up after we had received that report, so that any suggestions it might contain might be dealt with too by the select committee. But as it is everyone would be very much against any delay in the implementing of this Bill. I would suggest, therefore, that the Minister makes special note of this commission’s report, and by the time it comes up this Bill, I hope, will have been in operation for some few months. I hope the Minister will look at that report from the point of view of this particular Work Colonies Act, as it will then be, with a view to moving at some later stage for an amending Bill to include such suggestions as the Penal Reform Commission may make on this matter. Should the commission deal with this vexed question of the misfits of our social system it would no doubt be valuable and the Minister might find it advantageous to introduce an amending Bill. It would have this additional value that by then we would have gained experience during the period our work colonies will have been in operation. If after this experience he finds this intense drive for a general observation centre is justified by the misfits in the work colonies the Bill will set up, that would be the opportune stage for him to benefit by the experience gained of the commission’s report and to set up such an observation centre. For these reasons I hope the House will pass this Bill as soon as possible and that the Minister will accept the amendment suggested by the Social Welfare Group, and the amendment I propose to move dealing with access to the board, and further that the Minister will keep an open mind and if necessary bring forward the amending Bill I suggest.

In going through this Bill I have been struck with how easy it would be to put my pals in work colonies though they do not deserve it; because it is quite easy to put up accusations against almost any innocent person, and from the most trifling faults to make it appear one is an absolute blackguard. I am reminded of how easy it might be to be made a delinquent by an experience that befell me in 1899. It was the only time I came up against the forces of law and order.

Be careful what you admit to now.

It was on 31st December, 1899, and in addition to being O.C. Field Telegraphs in Natal, at Chieveley Camp, I was also O.C. Celebrations.

You have not changed one little bit.

I and my comrades sang “God Save the Queen” and finished up with “Auld Lang Syne”. While we were still singing, Bruce-Hamilton, who was then brigademajor to General Lyttleton, came to my tent with a file of guards with fixed bayonets and arrested me. It was to have been close arrest, but, owing to the fact I had handcuffed to me a cash box containing £200 in silver and gold, he placed me under open arrest. In the morning, however, when I had to open the telegraphs, he released me from arrest, but told me I had been guilty of an offence which merited being shot at dawn—I had disturbed the rest of Gen. Lyttleton. That little incident shows how easy it is to become a delinquent, and once a delinquent it is easy to aggravate the offence with the further offence of being under the influence of drink. I may say on that specific occasion Johnny Walker was 21s. a case.

What horrible recollections.

No penalty is provided in the Bill for the person who lays what is manifestly false information in a spirit of revenge, and yet it may have the effect of a magistrate wrongly convicting a person and suggesting he be sent to one of these work colonies. I hope the Minister will go into this question and, if at all possible, add in the Bill a little more protection for the public. It appears to me that many people look at the prospective candidate for a work colony as either a confirmed drunkard or a dissolute person, and they never think of him as a man who is only a venial offender. The Minister will possibly say this Bill is intended to protect these people, but I cannot for the life of me see why such a person, possibly a first offender, and possibly meriting some punishment, should first of all be placed in a cell or a lock-up or a gaol before he appears in front of the authority who is competent to pronounce a decision in his case. According to the Bill, anyone convicted of a paltry offence, and proved to have been under the influence of liquor, might be sent to a work colony. Nor is this any light matter, it is a matter of being put away for three years unless some miracle happens in the meantime. So I suggest that these prospective inmates of a work colony come under the proper authority for a decision before being put in a gaol or lock-up. Another matter that struck me is in connection with the type of supervisors at the work colonies. I do not know from actual experience, but from my reading I have gained the idea that some of these so-called nurses at our mental institutions are by no means gentle with their patients; and if you are going in for the rehabilitation of these people and their restoration to normal life, you will need something better than the type of nurse found in mental institutions, a fellow who is quite handy with a club and with his fists if necessary. That is not the kind of supervisor you want for these delinquents, who may not be guilty of any very heinous offence, although requiring a measure of training and rehabilitation. I would suggest to the Minister great care be exercised in the selection of supervisors in the work colonies. I cannot see any provision in the Bill in respect of the engagement of staff. There is nothing here to differentiate one class of inmate from another. They are all going to be dissolute, they are all going to be drunkards, they are all going to be delinquents or something of that sort, and nothing at all is said about those who should not be classed in these categories. I suggest before the Committee stage is entered upon some consideration be given to the matters I have now raised.

Everybody welcomes this Bill, but it is a comprehensive measure. In the first instance it is definitely far-reaching as far as the liberty of the individual is concerned, and in the second place it is in some respects far-reaching as regards family life. It is a pity that such a Bill has to be introduced, but of course we live in the world and we always find those conditions. We should, however, use great care as regards those persons who are sent to work colonies. They are called work colonies, but the fact remains that as soon as the liberty of the individual is restricted, he regards it to a certain extent as a prison. We cannot get away from that. If he is placed there, he regards it as a prison, because certain restrictions are applied there. He does not have complete freedom of movement. He must receive consent before he can leave it, and so forth. When one is dealing with this sort of measure, it is certainly necessary that there should be a thorough examination as regards each individual sent there. That man’s life must be examined; an investigation must be made to see whether it is not perhaps low wages he received, or bad housing he had, and all those factors in life which perhaps played a role and brought him to the position which necessitated his being sent to a work colony. We also see that penalties can be imposed on these persons. That is present in the Bill, and that is the reason why I say that we cannot get away from the fact that these people will regard a place like that as one where a certain amount of punishment is meted out to them. Now, what will be the best thing to do to prevent large numbers of people going to these places? Work should be provided for everyone; provision must be made for decent wages to be paid to everybody so that their families can be maintained. Care should be taken to provide the young man and the young woman who wants work with work at a living wage so that they can live a decent life. Human beings desire to live a decent life and I am convinced that if we investigate the history of many of the people who landed in work colonies we will find that they had a disappointment in life because they could never get to a position where they could earn enough to feed and clothe themselves decently and to live a decent life. We shall find such things in the lives of those people. It is not everyone who can resist the storms of life. It is not everyone who can resist misfortune and adversity. A person may perhaps come from a poor family and never get an opportunity of properly finding his feet in life. The disappointment is already present in his youthful years. That disappointment and everything that follows on it cause discouragement and that condition of discouragement sometimes lets a man deteriorate to such an extent that he is practically lost. An efficient personnel will have to be appointed to deal with these people. But will the main work of that personnel just be to give those people physical exercise, and to train them in other directions? If that is so, I say that there will be no success or felicity. Those people who come there for various reasons are people who must receive Christian treatment. They must be made to feel that a personal interest is taken in each of them. A brotherly hand must be extended to help them. We shall have to have a most efficient personnel to convince them that a personal interest is taken in them and to help them to become again useful persons in the community, and to pull them out of the mire of difficulties in which they find themselves. Great care will have to be taken in appointing the right personnel over those people. The weakness we find in the Bill is this. Not only one race will be sent to those colonies, and for that reason it is necessary that the personnel and the boards should be thoroughly bilingual. Nothing is said about that in this Bill.

That argument has already been used by previous speakers.

Then I will not refer to that argument again. I say precautionary measures have to be taken so that we do not find a great influx into the work colonies. In the report of the Planning Council we find it states that there will be 230,000 unemployed. It will be the duty of the Minister and the Government to take precautionary measures with an eye to the future, or else we will have an influx of the people to the work colonies. We cannot get past that. We must take measures to prevent such a possible influx. What I feel is that all these charitable institutions should be encouraged to proceed with their good work which they are doing for the use of the country. But we also have to see to it that there are jobs for those youths. Possibilities have to be created for them to earn a decent living and then only will there be success and will the day possibly dawn when there will be very few people in these work colonies. But I wish to repeat that great care should be exhibited not to make those people feel that they are in a prison instead of in a place where something is being done for them in their own interests.

I think there is no need for the hon. member who has just sat down to have the fears he has expressed here, because after all ample provision is being made for the various forms of research to which he referred. As far as I can see there is an arrangement whereby enquiries can be made into the status of all these so-called prisoners or inmates of these places, and there will be an arrangement made whereby psychiatrists and other people who are specialists of that kind can study the people who are committed to the colony so as gradually to put them in some after-care arrangement whereby their future can be guaranteed, and these unfortunate people who have sinned probably through ignorance or because of their particular mental make-up will be enabled in that way to live a better life afterwards. I understand that another type of person will be aided under the Bill, that is to say, prisoners who are discharged from prisons and who have no employment to go to. When they come out of prison many a man has no place to go to and he is a marked character. The very clothes these people get show them up and the man in the street knows that they come from prison and employers hesitate to give them employment. The result is that the unfortunate fellow who has paid his debt to society for the offence he committed continues to be subjected to punishment. I hope that these people will either be transported to some other place where they are not known and where they can make a fresh start, or they will be taught trades whereby they can be enabled to earn their living in another way and that they will be assisted in many ways. But there is another point which I should like to bring to the notice of the Minister, and that is in regard to a set of people who, if they are not criminals themselves, are dangerously near it. I allude to that type of person who is largely employed today in collecting liquor for the shebeens, and I am told by people on the liquor boards that there are certain men whom the police know quite well who go from the off-sales department of one hotel to the off-sales department of another hotel. They get two bottles of brandy from each of these places until they have quite a collection and they are employed by the shebeen holders to bring these commodities to the shebeens which are infamous dens of iniquity. Every conceivable crime is committee in those horrible places. Then in regard to the idea that hon. members have that these people will be marked men, I want to say that if we can introduce an amendment into this Bill whereby these people can be questioned as to who their employers are, they will then either have to give their employers away, or they will have to tell a lie, and if they tell a lie suitable action can be taken against them. You have got the man whichever way it goes or you have got his employer. If he gives the name of his employer you will in that way be able to trace the shebeens. For instance, a man who is known to be idle and who never does a day’s work can be approached by a policeman, and the policeman can ask him who employs him. If he says that he is not employed by anyone the policeman can say that he is a vagrant. If the man then produces money to show that he is a man of means the policeman can point out to him that he must have been employed somewhere in order to get that money. In this way the man can be pressed to say where he got the money and sooner or later he will say where he got it. I hope that my amendment will be favourably received by this House, and I hope it will have some effect in stopping the runners for shebeens, and I shall do my best to word it in such a way that we will be able to rope in these nefarious traffic dealers and stop a good deal of the shebeening that is going on in Cape Town and other big places, but particularly amongst the large population of natives who are flocking into Cape Town and other large cities in the hope of getting employment.

In presenting this Bill to the House for its second reading, the hon. Minister referred at some length to the previous history of this Bill in its various draft forms, and told us that very many people, authorities, interested persons and what not, had been consulted and had indeed given their various and sometimes conflicting opinions over this period of several preparatory years. Well, Sir, there is an old proverb about too many cooks spoiling the broth, and it may be that this principle is operating in this particular instance, and that is perhaps why we do not find this Bill particularly appetising. If the Minister is going to thrust this Bill through the House, and I suppose he will, we hope very much that he will be more than reasonable, or at least more reasonable than usual, in the matter of amendments, because we have quite a number to move on principles which appear to have been overlooked. I have done a little here and there in the way of social welfare work, and whether I enter a household of a psychopath, which since the war-strain settled down on us all, I too frequently do, or the household of a “won’t work” as may happen, or the home of an inebriate, my sympathies go out in particular to the children of that family. The wife and mother must be pitied, but the sufferings of the children are saddest of all. I fail to see in this Bill a sufficient understanding of what the circumstances of the families of these people are, during the period of committal of the bread-winner to a work colony or other similar institution. It seems to me, Sir, that provision should be made definitely and generously not only for the support of the families of men committed under this Act to these institutions, not merely their support, which I suppose will be given under the Children’s Act No. 31 of 1937, an Act which is not generous in its promises and is very disappointing in my experience in its performance …

Order, order. The hon. member must not reflect on a statute unless he moves for its repeal.

I could quote a good deal to the House which has given me this somewhat poor opinion of that Act.

Order, order. The hon. member is not observing my ruling now. I must draw the hon. member’s attention to Standing Order No. 73, which provides that an hon. member is not allowed to reflect adversely on any statute except on a motion for its repeal. I hope the hon. member will observe my ruling.

I bow to your ruling, Sir, that I must not reflect upon the Childrens Act. But there are two meanings of the word “reflect”. One is to censure, and the other to consider, or “take thought” upon. It is my private study and consideration of the Act which has put me in doubt. I hope that provision will be made under this Bill, or under regulation, or in some efficient manner, for the efficient support of the families of the men committed to these institutions, and, even more important since this is a Bill for rehabilitation, that some means of supervision and indeed some means of training will be provided for the families, as well as the offender, or the sufferer, as the case may be. If the family is not rehabilitated during the time that the man is away, then surely a great deal of the good would be lost when he comes back to that family, which he pulled down in the first instance, but which may now pull him down from the new standard he has reached. I am satisfied that this Bill seems to have overlooked the need for the support and for the training of the families of the men committed under the existing Act, and to be committed in the future under this Bill when it becomes law. I have, moreover, to stress a point which has been alluded to by the hon. member for Durban (Berea) (Mr. Sullivan), and it has to do with the making certain, before committal, that any individual should go, and will personally gain by going, to a work colony, retreat, or to any institution of this kind. The Bill, as I understand it, provides for the examination by doctors and psychiatrists and the like of each person, but only after the man has been committed. We feel that before any person is committed to a work colony under this Act, he should be subjected to such an examination. I think another difficulty will arise here. This decision involves the need for medical knowledge and training. The magistrate may not feel qualified to decide on such a point. There is a great shortage of psychiatrists, and I hope that the Minister has some plan in the future to remedy that. It is one thing to say that this or that or the other shall be done, it is something entirely different to get it done. Promise is not the same as performance, from time to time. We recommend very strongly that an examination of this kind should not be given after the man is committed, but before, and that this undertaking be incorporated in the Bill. Then one other necessary amendment we propose to put has to do with a fundamental democratic principle. So far as I understand this Bill, there is a total omission of a well-known democratic right, and that is the right of a person so committed to appeal through the intermediary officials to the actual and supreme management of the institution. There must be a board of management, and every patient, as I prefer to consider the individual, in that home, whether because he is given too much to the drinking of alcoholic liquor, or for psychopathic reasons, or some minor anti-social tendency, is surely a patient, and has a right to appeal against injustice. It has been suggested by the hon. member for South Coast (Mr. Neate) that sympathetic treatment shall be given to these people, and we on these benches want to make quite sure that there will be a right of appeal all the way though from any person so committed to the management board of the institution. There is only one other word that I have to say, and that is in the way of emphasising what the hon. member for Durban (Berea) has put before the House, namely, the great need for separate institutions for those men who are inebriates. Their case is different altogether from that of psychopaths or won’t-works, and as soon as it can possibly be done separate institutions should be provided for them.

That is why the Bill makes provision for retreats.

We commend the Minister for that. It is a very necessary provision, and our support can be fully relied upon so far as this item is concerned. What is required is not punishment, but curative treatment.

I would like to express my appreciation to the members of the House on all sides for the way in which they have received this Bill, and for the constructive speeches which have been made here, speeches of a most helpful character which, I am sure will be invaluable to the Department of Social Welfare when administering the new Act, speeches such as those of the hon. member for Roodepoort (Mr. Allen), the hon. member for Gordonia (Mr. J. H. Conradie), the hon. member for Brits (Mr. Potgieter), the hon. member for Jeppes (Mrs. Bertha Solomon), the hon. member for Durban (Berea) (Mr. Sullivan), the hon. member for Pietermaritzburg (City) (Col. O. L. Shearer) and other hon. members, all carefully thought out speeches made with the object of referring to those aspects of the Bill where they felt that perhaps the provisions might be strengthened or where they felt that their advice might be helpful so far as the administration of the Act itself was concerned. I would like to add that it seems to me that these speeches are in a way a complete answer to the complaints of the hon. member for Swellendam (Mr. S. E. Warren) who accused me of not dealing with the Bill as fully as I should have done when moving the second reading of this Bill. The hon. member for Swellendam complained that members are entitled to know the subject-matter of the Bill. That was his complaint. I entirely agree with the hon. member for Swellendam, but it seems to me that the manner in which these hon. members to whom I have referred and others addressed the House show that they are fully conscious of the provisions of the Bill and that they took the trouble to acquaint themselves with the relevant provisions and that they were not going to wait until the responsible Minister has made his speech in the second reading debate in order to obtain some shred on which to hang carping criticism. I would further remind the hon. member for Swellendam, that the House did have before it the report of the Select Committee as well as the explanatory memorandum which I tabled some weeks ago, and in those circumstances I felt that it would neither be discourteous nor unreasonable, when introducing the second reading at a late stage on Thursday afternoon where I had to confine myself to a concise statement of the principles underlying the measure, to deal comparatively briefly with the measures incorporating those principles. I think it is correct to say that with the exception of the hon. member for Durban (Berea), supported in a somewhat luke-warm fashion by the hon. member who has just sat down, the hon. member for Durban (North) (the Rev. Miles-Cadman) the Bill has received almost unanimous commendation.

In favour of the principle.

The Bill has received almost unanimous commendation not only in regard to the principle of the Bill, but the provisions of the Bill have received almost unanimous commendation and for that I want to express my warm appreciation and gratitude. There have, of course, been a number of criticisms of what might be termed a relatively minor nature, some of which I shall deal with now and others which it may be more appropriate to touch on during the discussions in the Committee stage. But the general response has been most encouraging and helpful. The hon. member for Jeppes has referred to what she termed a somewhat unfortunate controversy raging outside the House on some of the provisions of this Bill. I agree with her; I feel that that is unfortunate. I cannot help thinking that to a large extent some of that controversy or the criticism contained in that controversy is based upon nonascertained facts or a misapprehension of the facts as they are. It is certainly curious that there should be this controversy raging outside the House and that inside the House we have this almost unusual atmosphere of calmness and tranquillity. The hon. member for Durban (Berea), if I may so call him, is the sole standard-bearer of those who are still carrying on the fight.

I have had half a dozen wires today.

I have no doubt that the hon. member has. Some of us have had even more telegrams. But the hon. member has brought in the argument presented by the Cape Co-ordinating Council of Welfare Services, arguments which were put to me and to the social welfare group of this party, and arguments which have been placed before the Select Committee of this House which made its recommendations after considering those arguments. The hon. member for Durban (Berea), following that up, makes this charge against the Bill, namely that it retains the worst features of the present work colony system, and he goes on to accuse me of disregarding the advice of the Cape Co-ordinating Council of Welfare Organisations having failed to tell the House that all the proposals have been put before me, and he suggested that I rather ungraciously threw out all suggestions which had been so readily made available. Let us get this issue clear once and for all. I do hope that not only inside the House but also outside the House we shall get this issue clear once and for all, and even if there is to be criticism, let there be criticism, but let there be criticism on facts on which we are all ad idem, facts on which we are all agreed, because judging by some of the criticism of members it would appear that all the relevant facts have not been made available. I have not the slightest quarrel with the Press in this matter. I always hesitate to quarrel with the Press, but I do feel that sometimes the Press might welcome it if one places facts before it which may not have been available when criticisms were made. For instance, in commenting upon the discussion in this House, it was said in this morning’s paper …

Order, order.

There was a suggestion that certain amendments which I had not conceded were regarded as essential by all sections of the House. I want to put it this way, that outside there was a feeling, a perfectly bona fide feeling, possibly because of a misconception of the facts, that certain amendments which I refused to concede were unanimously wanted, are regarded by all sections of the House as being essential. What are the amendments which are regarded as essential by all sections of the House? Or let me put it this way; what are the amendments referred to, and are the amendments in fact regarded as essential by all sections of the House? Quite obviously the amendments referred to are the amendments which Professor Batson put forward originally which subsequently had the blessing of the Cape Co-ordinating Council of Welfare Organisations, but before they had that blessing were placed before me. I would remind the House that these suggestions were put before me at my request. I was asked to see a deputation before the Co-ordinating Council had come to any conclusion, before it had decided to re-open the matter, and I gave the deputation an opportunity of discussing the matter fully with me, and with the officials of the Department of Social Welfare, and then I asked them whether they would be good enough to let me have their suggestions. They gave me those suggestions, and then in order to ensure that those suggestions should obtain the fullest consideration, because the advice I received from the Department of Social Welfare was not in favour of accepting those amendments, because I wanted to ensure that they would have the fullest consideration, because I was prepared to have a perfectly open mind in the matter, I suggested that Professor Batson should consult the members of the Social Welfare group. In the meantime these matters were taken to the Cape Co-ordinating Council which started to pass resolutions, and in the meanwhile there were notices in the Press that the Bill needed trimming up in many respects, and it was hoped that the Department would take notice of these matters. No suggestion has been made that the request for those amendments had come from me and that although the Department appeared to be somewhat unfavourably disposed towards them, nevertheless I wanted further discussion with a view to getting the fullest consideration of those amendments, and if I felt that they were the type of amendments which hon. members, in contra-distinction to the Department, thought were necessary, I would have been prepared to introduce them. Professor Batson very courteously accepted my invitation to meet the members of the social welfare group of the House. He did so and discussed the amendments with the members of the social welfare group, but apparently he failed to convince them, and it is now left to the hon. member for Durban (Berea) to press those amendments. I want to put it to the test this afternoon. Those are the amendments which Professor Batson and the Cape Co-ordinating Council asked for. Those are the amendments which the hon. member for Berea says I have thrown overboard; those presumably are the amendments which it is stated outside the House I have rejected but which it is felt by all sections of the House are essential for the efficiency and the humanity which the Bill proposes.

You said in your second reading speech that you turned down Professor Batson’s suggestions. You made that quite clear.

I am not suggesting that I ever accepted Professor Batson’s suggestions. What I am attempting to suggest is that Professor Batson’s suggestions are not considered by all sections of the House or even by a large section of the House as essential to this measure. On the contrary, as far as I can judge the feeling of this House from the speeches on the second reading debate, the vast majority of this House would reject Professor Batson’s suggestions as being impracticable, however idealistic. Let me deal with them and let me deal with the way those things have been put across. One of the suggestions is this. I say it is suggested outside that advice has been disregarded by me, and it has been stated outside that the hon. member for Durban (Berea) pointed out in his second reading speech that one of the recommendations of the Co-ordinating Council was that the inmates of work colonies should have access to the board of management of the colony. That suggestion which has come from the hon. member has naturally evoked applause and support from all fair-minded persons outside. The statement has been made that I have rejected the right of access to inmates to the board of management. If that were correct, any criticism, however strong, would be justified on that score. But is that correct? Has the hon. member for Durban (Berea) or have the protagonists of the Co-ordinating Council put the case for this amendment outside the House or inside the House in its proper light? What is the actual position? In fact, the position is that section 34 of the Act provides that regulations may be made dealing with the inmates of work colonies, and section 34(1)(m) provides that regulations may be made enabling the inmates to have access to the management and vice versa. Why was that provision put in the regulations if it were not for the express purpose of allowing the inmates to have access to the management? And what is more, I have given my word that access would be given to the inmates of work colonies to the management; yet the impression is created outside that I have disregarded that advice. That is not a fair argument to use outside the House, and I am very glad indeed that members of the Opposition—and I pay them a high tribute—have disregarded any political capital they might have made out of this, and that they have not followed up this specious, bogus argument. What is the next amendment which I have rejected? I may say, before I go on, in regard to this question of access, that the social welfare group felt it was not necessary to go further than that. I want to be fair to the protagonists of the amendments. The real point made by Prof. Batson was that he wanted this right to be entrenched in the Act. That, of course, was not said in this House before the hon. member for Jeppes spoke. What they really want is not for this right to be provided by way of regulation, but to be entrenched in the Act. The social welfare group saw no necessity for that, and the Department of Social Welfare did not see any necessity for that. I have given my word, but as I am personally responsible I am quite prepared to accept that amendment, and if anyone wants it in black and white I am quite prepared to accept it, and if any hon. member will move it in the Committee Stage I will accept it. Then the next amendment was an independent board of inspectors. It was said that in order to ensure that the inmates should be properly cared for, because we were now dealing with a class of persons who were not criminals and who might be sent to work colonies for a number of reasons, we should ensure that there was adequate supervision; it was suggested that there should be a national board of inspectors which would visit these work colonies at regular intervals and submit annual reports. In actual fact, provision has been made for boards of management for every colony, and for every retreat, and for every hostel. These boards of management will consist of independent persons, of members of the public, not members of the public service or officials of the Social Welfare Department, with the possible exception of the chairman. The practice has been in the past to have as chairman of a board of management the local magistrate, and I think that is a practice which will commend itself to be followed in the future. But, apart from that, the persons to be appointed to these boards of management will be independent persons of the type such as Mrs. Sales, the lady who gave such useful evidence before the Select Committee and who is now pressing for further amendments. Mrs. Sales has done invaluable work on the visiting committee of the Kraaifontein Work Colony. She is the type of person who will be appointed—philanthropic persons whose whose mental make-up is sympathetic towards the cases with which they will have to deal. That is the type of person who will be placed on the board of management. If that is so, why have a further committee? Why have a further committee to look after the management committee? If you are not going to trust the management committee, how are you going to trust the inspecting committee? The next thing will be to have a super inspecting committee to inspect the inspecting committee, and so we can go on ad infinitum. In these matters I want to get unanimity. I want to have an arrangement that will work, and when we come to the Committee Stage I am quite prepared to argue that matter, and if the consensus of opinion is that we should have this super inspectorate, I am quite prepared to have it. My own personal view is that it is quite unnecessary to have it, that it will not serve any useful purpose. I am impressed by the suggestion made by the hon. member for Roodepoort (Mr. Allen) that members of Parliament may be invited to visit these institutions at regular intervals. I think that is an excellent suggestion, and if they can spare the time to go there ….

As inmates or as visitors?

I am dealing with matters falling under social welfare now, and not under the administration of my colleague, the Minister of Health. The hon. member for Durban (Berea) moved a third amendment that there should be observation centres through which all potential inmates should pass before going into the work colonies. He said they should not arrive in the colonies via the gaols but should be classified into types. The hon. member for Jeppes dealt effectively with this point this afternoon. I think we are all ad idem on that point. I am at one with the hon. member for Berea that we should have classification, but classification is one of the fundamental principles of the Bill. We want to get away from haphazard methods in treating the inmates. But this is a question of practical politics. How is it to be done? Section 7 (2) makes it perfectly clear that the Minister of Social Welfare “shall set aside one or more work colonies or retreats … wherein special facilities shall be provided for the diagnosis and classification of inmates received therein”. In terms of the Bill as it now stands there can be one work colony which could be used as an observation centre and through which every proposed inmate can pass. But Section 7 (2) provides that not only can the Minister set aside one or more work colonies for this purpose but he can use portion of one or more colonies for this purpose. Here we have to have regard to the geographical features of South Africa. We may be receiving inmates in a European work colony from the four corners of the country. If every person, every inmate, whether he is a person who is dealt with under section 13 of the Act, whether he is an inebriate or whether he has been convicted of an offence, whether he is an old lag or a “won’t work” has to go through an observation centre, hon. members will realise that a great deal of expenditure will be necessary to provide the necessary staff, and a good deal of time will be wasted. A man may come there who is simply an old lag. In terms of sub-section (3) of section 7 the magistrate or judge who decides that a man is to be sent to a work colony may also in addition order that before the Secretary for Social Welfare decides to which colony to send him he should be dealt with by a psychiatrist. If the magistrate has any doubt he can ask that that should be done, and the Secretary is bound to do it. Otherwise the magistrate commits to a work colony. He does not commit to a specific colony. His word is not the last word. If he commits to a work colony it falls to the Secretary for Social Welfare to decide which work colony is the appropriate one to which to send a particular man. The Secretary may have no difficulty in deciding that, on the papers submitted to him. But if he has any difficulty he will then arrange for a proper examination.

How many do you contemplate for Europeans? You will have to decide to which colony to send him, and how many have you?

My hon. friend now asks me to deal with that. I have one work colony. As soon as I can get more I shall do so. But that is dependent on a number of factors. The hon. member knows that we have a housing shortage.

What is the good of the classification if you have only one?

That is why I want to make even a start possible. If all these amendments have to go into this Bill, it will be a dead letter. I have to deal with practical things, not doctrinaires. I have to deal with cold blunt facts. I have one colony for Europeans. If everyone has to go there, the whole system is killed. We want to work up to the stage where we have as many colonies as we have types. It may be in five years’ time, but when the building position is eased and I can get the buildings I need, after the next general election we may collaborate to work up plans for the next five years and then I can tell you how I will assist you to provide the necessary staff. There is the fullest co-operation between the Departments of Social Welfare and Justice to ensure that the right type of staff is allocated to work colonies and welfare centres. In that connection the hon. member for Roodepoort (Mr. Allen) has said that he wishes to amend section 12 to ensure that provision is made for the proper staffing of these colonies. I shall be glad if the hon. member will move that amendment, because it will strengthen the provisions of the Bill. In all the circumstances he will see that what we are doing now is to go forward with the classification principle but not spoil the Bill. We will classify and as we get more work colonies, the classification will proceed at an accelerated pace. Finally the fourth amendment to the Bill was that hostels and cottages for the dependants of inmates of retreats should be provided. That is also a very excellent ideal and I hope that we shall one day be able to achieve the ideal of providing for the dependants of all persons whose freedom is interfered with by the State. If you provide hostels and allowances for the dependants of the men who go to work colonies, why not provide hostels or cottages or dependants’ allowances for the unfortunate families of men who are sentenced to terms of imprisonment in gaol? It is the man who has to pay his debt to the State. It is not the woman or the children who have committed an offence. They are perfectly innocent, yet no provision is made for them. It seems to me that while this is the ideal that we must strive for, it is unfair to describe this Bill as failing in its purpose of it does not bring about the idealistic solution when we have a much larger number of dependants of persons in gaol. It seems to me that the family of an inmate of a work colony will get much better treatment than the family of a person who is in gaol, and not only that, but the families of persons who have committed no crime at all. We have to aim at an upward structure and we have to provide for the betterment not only of persons who have strayed from the social path, but adequate provision must be made for all sections of the community, and not only those who break the law, but also those who do not, and this aspect must be dealt with at the proper time. It would be inappropriate to deal with it now. I understand hon. members agree with that view, and therefore I say that of the four amendments which we have put forward by the hon. member for Berea, where is this unanimity on all sides of the House in favour of them? If hon. members are in favour let them say so. I think only two hon. members said they are in favour. They are the solitaryprotagonists of these amendments which I have been told are considered essential by all sections of the House. But I feel that it is necessary to clear the air on this question, because we will no doubt hear more of this and the facts must be placed on record. I would also emphasise what the hon. member for Jeppes has said in regard to the allegation that the Cape Co-ordinating Council was not asked to give evidence before the Select Committee. The facts are as follows. The Council submitted a memo to the Select Committee. The Select Committee examined the memo and found that it merely repeated the arguments and suggestions made by Mrs. Sales in her evidence. This is borne out by what the hon. member for Jeppes has said. The memo was in fact an extract from the memo of Mrs. Sales. The Select Committee then formally asked the Coordinating Council if it wished to add anything to this memo and the answer was in the negative. The Select Committee then decided not to hear verbal evidence from the Council. That in short is what happened. They submitted the memorandum and it was found to be similar, in fact an extract of Mrs. Sales’ memorandum. Mrs. Sales was called to give evidence, and gave exhaustive evidence. The Council were asked whether they wanted to add anything and refused. In these circumstances it can hardly be said that any injustice has been done to the Board of the Co-ordinating Council in putting up their arguments. Then the hon. member for Cape Western (Mr. Molteno) asked whether this measure should not await the report of the Lansdown Commission. There is a good deal to be said, as was pointed out by the hon. member for Jeppes, for co-ordinating the work of the administration of work colonies with the administration of our penal institutions, and no doubt in the light of that Commission’s report we may receive ideas which may have to be incorporated in further legislation, but it does, seem to me that we should start now. The Department made an attempt some years past to get improved legislation on the Statute Book, and it would be unwise to waste any further time now. A number of hon. members referred to the provision for snare diet and solitary confinement and the transfer to prisons of certain inmates of work colonies. The hon. member for Johannesburg (West) (Mr. Tighy) felt that there should be some provision for an appeal. Well, provision for appeal is included in the Bill. Section 30 (2) makes provision for appeal. It reads as follows—

And the magistrate may then confirm or set aside or correct the proceedings. It is in fact automatic review of the case for which provision is made in the Bill. The hon. member has also referred to spare diet and solitary confinement, and certain other hon. members have felt that this is out of keeping with a work colony. The Select Committee considered it and decided to make no change, but it is a matter on which I will receive recommendations at the Committee stage. The hon. member for Brits (Mr. Potgieter) referred to the allowances paid and asked what happened to the children of inmates. Provision is made for payment of allowances to inmates of colonies. The present scale is 2s. 6d. a day for work, 2s. 3d. of which automatically goes to the wife, and 3d. to the inmate. It may be that we should increase that scale in certain cases. That is a matter to be decided in the future. But, in addition to that, section 16 of the Bill provides that where the magistrate dealing with the case finds that there are children in need of care, he shall bring the matter to the notice of the Children’s Commissioner, and then the provisions of the Childrens Act come into operation and additional grants are made under the Childrens Act. Again, I do not contend that these grants are necessarily of a standard to maintain a family in proper circumstances, but at any rate they are there, and the children and wives are not entirely neglected, and they provide a start along the upward ladder of social reform. The hon. member for Newcastle (Mr. Robertson) has referred to the necessity for paying proper salaries to the staff, and has linked that up with what other speakers emphasised, the necessity for having the right type of personnel. I entirely agree with that. I hope that as a result of the Centlivres Commission we will be able to offer attractive salaries to the right people. It is a matter to which I shall give my personal attention. I shall go into the matter with the Secretary for Social Welfare as to the question of the choice of personnel, because I entirely agree that whatever the provisions of the Bill may be, they are doomed to failure unless the spirit of the Act is carried out. There remain two questions to be dealt with which I can dispose of briefly, the first being the one raised by the hon. member for Christiana (Mr. Brink), namely, the question of separation of races. Provision is made in the Bill for that, and he need have no fear in that regard. The hon. member for Swellendam (Mr. S. E. Warren) raised the question of lingual qualifications, and he suggested that the decision taken by the Select Committee was taken on my instructions. That is not correct. The hon. member did justice neither to himself nor to me when he made that suggestion. The members of the Select Committee took their decisions on their own initiative. I did not instruct them. I agree that any South African has the right and must have the right in these circumstances to be dealt with in his own language, to speak to the staff and superintendent in his own language, and to the management committees, but there is nothing in this Bill to prevent it. Mr. Speaker, I think I have dealt substantially with the main points raised, and I would again express my warm appreciation of the assistance given to me by hon. members in welcoming this Bill and making the constructive suggestions which I am sure will be valuable in the future.

Motion put and agreed to.

Bill read a second time; House to go into Committee on the Bill on 6th March.

I move—

I want to move at the same time—

I second.

Debate adjourned; to be resumed on 6th March.