4. In Australia a much greater pro- portion of credit business is done by means of overdrafts than is the case in (ireat Britain, and the bankers whom ve saw were of opinion that it would se advisable, if possible, to substitute bills of exchange for bank overdrafts, especially in connection with the supply of credit facilities in the event of the setting up of a reserve bank, because part of the machinery of a central bank is the acceptance and dis- counting of trade bills whereby trade credits are automatically increased when and in proportion as an expan- sion of trade may call for such action, or automatically decreased when the course of business naturally calls for a diminution in the available credits. The primary difficulty in effecting such an alteration is the cost of stamping the relative documents (bills of exchange). In Victoria this is 4s. per cent., and to reduce this (say to is.) would greatly encourage the desir- able practice of using bills of exchange in substitution for overdrafts. 5. The question of establishing a reserve bank was discussed at all our meetings, and we found that, generally speaking, the banking community is in favour of such an establishment, though there are some reservations as to the expediency of making the Com- monwealth Bank that reserve bank, hecause the Commonwealth Bank at present acts as an ordinary trading hank, and, therefore, does not wholly fulfil the following conditions of the central bank, which, inter alia, Sir Ernest Harvey in a recent article laid “own as heing essential for such a sody : — ‘ A central bank, in its manage- ment and policy, should be free from Government control and the influence of politics. “The assets of the central bank should be of the most liguid character possible. “ A central bank should be the hanker of the trading banks. ‘““ A central bank should not ordinarily compete with the trading banks for general hanking business. ‘A central bank should quote publicly the rate at which it is prepared to discount approved bills.”’ 6. A recent author, writing on cen- ral banks throughout the world, says: ‘In the case of Australia, where the juestion of establishing a true central rank is now under discussion, one of ihe issues that will have to be faced is ‘hat the Commonwealth Bank of Aus- ralia is, under the present law, per- nitted to engage in general banking 'usiness to an extent inconsistent with ‘he responsibilities of such an wganization.” He also says: ‘Such V vague provision as that in the law egulating the Commonwealth Bank of \ustralia, namely, that it may make wdvances on any security that it thinks ufficient, would be out of place n the character of a true central yank.” 7. We have no desire to intervene n the question which the banks are ‘ully and scientifically considering, yut because we are of opinion that the stablishment of a bank of reserve which at the same time would facili- ate trade and add security) is desir- ible, we think it is a matter for con- sideration : — (a) Whether if the Common- wealth Bank is to be (as it naturally would be, and, indeed, is proposed to be) the reserve bank, the directors should not be ap- pointed otherwise than by the Fovernment. (b) Whether its branches, in so ‘ar as they are ordinary trading ranches, should not be entirely livorced from the bank acting as a reserve bank. (¢) Whether in order to afford proper opportunities for the issue and negotiation of trade bills, which facilitate the business of a reserve bank, the stamp duties on bills of exchange should not be very much reduced. 8. It was suggested to us by the vankers themselves that greater use night be made of their financial -esources if they were fully consulted ome time before the issue of Govern- nent loans and securities in order that they might the better take any neces ary action to support such issues.