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52. Postal Banking Scheme.

The general principles of the following scheme for the establishment of a National Postal Bank were adopted at the Interstate Conference of 1908. The scheme was drafted by Labor member King O'Malley and formed part of his proposal for handling the finances of the States and Commonwealth:—

The National Postal Bank.

1. In order to facilitate and economise the carrying out of the financial transactions of the Commonwealth and the States, and especially those connected with the conversion, redemption, renewal, and issue of loans, it is proposed to establish a National Bank of Deposit, Issue, Exchange, and Reserve.

2. It is proposed:—

(i.) That this bank shall be conducted purely as a Government Department, absolutely free from political control.

(ii.) That it shall be so constituted as to possess all the powers and immunities requisite to its security, to the recovery of its debts, and to the disposal of its property.

(iii.) That its capital shall be represented by 12,000 shares, of £100 each, of which at least 6000 shall be in the hands of the Commonwealth Government, and that of the balance no State Government shall hold more than 1000 shares.

(iv.) That the shares of the bank shall be transferable only to the Governments of the Commonwealth and the States; that the failure of any or all of the States Governments to subscribe shall not prevent the bank from commencing operations; and that in the event of a State Government desiring to dispose of shares in the bank, the Commonwealth Government shall have the first option of purchasing.

(v.) That the Commonwealth and State Governments holding shares shall be jointly and severally liable in respect of all transactions of the bank.

(vi.) That the bank shall act as the agent for the Mint in the purchase of raw gold and silver and the issue of coin.

(vii.) That the bank shall be empowered to issue notes which shall, throughout the Commonwealth, be legal tender at all places except the head office of the bank in each State; and that at such head offices payment of the value

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of notes presented may be made in gold or Commonwealth Consols, at the option of the Comptroller-General of the bank.

(viii.) That the bank shall become the repository for the payments from time to time in respect of the Consolidated Revenue, Loan, and Trust Funds of the Commonwealth and State Governments, and the funds of municipal bodies, and shall pay interest on the daily balances thereof

(ix.) That the bank shall provide for temporary advances by way of overdraft to Commonwealth and State Governments and municipal bodies.

(x.) That the bank shall, in other respects, carry on an ordinary banking business, receiving from the public moneys on current account or fixed deposit, and making advances on good security.

(xi.) That the bank shall carry out the inscription of all Commonwealth and State Inscribed Stock, and make all arrangements necessary for the conversion, redemption, renewal or issue of Commonwealth, State, and Municipal loans.

(xii.) That the Board of Management of the bank shall consist of a Comptroller-General, representing the Commonwealth, and one representative from each of the subscribing States.

(xiii.) That the Treasurer of the Commonwealth shall be entitled to attend all meetings, and inspect all proceedings of the Board of Management.

(xiv.) That all payments to be made in London by Commonwealth or State Governments shall be made through the medium of the bank.

(xv.) That the General Post Office in each capital shall be the head office of the bank in that State, and that any post-office within the Commonwealth carrying on the business of a money-order office may be constituted a branch of the bank.

(xvi.) That the bank shall be a bank of reserve for the deposit of reserves of the banking companies operating in the Commonwealth.

(xvii.) That the regulations requisite for controlling shall be drawn up by the Board of Management of the bank and the Council of the Associated Banks of Australia, and approved by the Governor-General in Council.

(xviii.) That a branch of the bank shall be established in London.

(xix.) That at the London office, and at the head office of the bank in each State, Commonwealth Consols shall be obtainable in sums of £10 and upwards.