BankWatchThe love of money is the root of all evil
1 Timothy 6:10
A father of a young fellow trying to hold on to the farm made the deliberate claim one day at a sheep auction, "Interest rates are like cancer. They eat up everything you produce and still grow. We are just farming for the banks."
Since 'Operation Bankwatch' was first published in April 1991,
an intense battle of wills has taken place throughout Australia between
the banks and the borrower. The whole question of banking has been brought
to the forefront of Australian consciousness by the efforts of numerous
individuals and groups who have either written books or taken to the
lecture trail. Bankers have been put under great pressure to maintain
credibility over this period of time as responsible lending institutions,
but the host of corporate crashes & financial dealings over the past
few years that have been publicly aired with all the resultant
recriminations has more than highlighted great deficiencies in the
management of Australia's money system and financial institutions.
Governments of all persuasions and politicians in particular absolve themselves entirely from such responsibility in these matters and to why our financial system and economy has collapsed and is not being regenerated and refuse to apply themselves to this vital situation. The truth is the present impasse has actually been created by the actions and neglect of our Federal Politicians over a long period of time with the blessing of acquiescing State Governments. The responsibility is now entirely with these very same politicians, our duly elected representative to see that changes are made to Australia's financial system to allow unpayable debt to be accommodated & written down in some way. This situation must be addressed as a matter of urgency, otherwise the casualty lists among industry and farmers will grow & grow, till Australia self destructs economically and socially.
Conversely among other considerations this nations production capacity can only begin to regenerate with long term loans and low fixed term interest rates which would allow the small units to rebuild and flourish once again. This also would restore hope to young people rapidly growing disillusioned by what they perceive as grave financial injustices and ask whether the future holds anything for them at all. A conscious campaign to get changes has been stalled throughout Australia under the Bankwatch concept. Bankwatch committees have gone into bat endlessly over the past four years for a great number of people who want to fight to protect their way of life and hold on to their farms. Prime Minister Keatings, 'one Nation', commitment of 1992 to allow banks to claim taxation write-offs where restructuring of debts has been done off officially remains in place, but little used.
In the space of two years a great number of Bankwatch Action Groups of varying strengths have been set up across the nation as more and more people are asking why can't something be done? Bankwatch Leaders have travelled long distances in response to urgent situations more often by bus to promote the moral argument and show that something can really be done. Once the ordinary citizen begins to understand and take charge of their own financial affairs and begin to work within an action group structure, only then can Communities districts and peoples be held together. Bank foreclosures, evictions and repossessions can then be contested and blunted. Debt write off is certainly happening to a degree and some districts have already been settled down. But much more has to be done before any worthwhile changes are ushered in.
Bankwatch has further strengthened support from Trade Union movements along with wage earners and small business and anyone concerned to promote a single voice in this campaign to get better results from our financial planners. Our front line economists must share a dominant part of the blame for the financial mess Australia is in. The economists applauded the deregulation of the banking systems They condoned high interest rates as a financial Strategy for political ends. By their very understanding of figures these people would know when an industry or small business with fragile profit margins was deliberately set upon with outrageous interest rates that irreparable damage would result. But these same economists remain unchallenged & rationalise their projections by saying if we had less units doing this or doing that. the ones remaining will do better.
They push for micro economic reforms where industries are already pushed beyond endurance and so on. No thoughts about the social dislocation or what the flood of imports are doing to our base industries. Economists condone & argue for an unrealistically high value of the Australian dollar which essentially is keeping our exports almost valueless. In actual terms we need robust practical politicians, men & women who have compassion for the future of Australia, who will acknowledge the damage that has been done and immediately implement reforms to provide urgent help & protection for industry & farmers.
There are still legions of hapless victims being pushed to the wall with horrendous levels of unpayable debt. The Bankwatch Movement will continue to strive for changes to Australia's money system and make politicians aware of their obligations for the benefit of all Australians and to free the individual from his worst fears Jim Cronin March 1993
The story of the Bankwatch campaign needs to be told. The Eyre Peninsula, known in South Australia as the West Coast, had came through a number of droughts and adverse grain years during the 1980s. But none was as bad as 1988. It was the worst drought ever remembered in this area and ultimately caused terrible financial hardship It was not only the drought that cut income, but the viciously high interest rates; and grain prices (wheat in particular) had dropped as well. The awful prospect for many farmers of being forced off their land was too terrible to contemplate. Young people were leaving farms and towns in droves to find work elsewhere.
There was a great parallel looming in this present situation to that which took place in the depression years of the 1930's on the Eyre Peninsula when large numbers of farmers simply had to quit and walk off their land, However in that era the small community of Chandada produced men and women who became leaders and fought for farmers' and people's rights. One such person was Ron Loveday, an Englishman.
A former RAF World War I pilot who was battling to develop a scrub block at Chandada, Ron Loveday led the local branch of the Wheatgrowers Protection Association and was Secretary for the Eyre Peninsula. This was also at a time when the 'harsh debt adjustment act' was being administrated in its worst form, when banks suddenly recalled loans, and wheat prices fell to 15c a bushel. Loveday knew action had to be taken to oppose the 'seize and sell' syndrome of the banks which ruled the day. In pursuit of this end he ultimately became Minister for Education in the Dunstan Government as Labor member for Whyalla. Ron Loveday was motivated simply by the desire to help other people out of their difficulties and was determined to see others do well for themselves without fear or favour.
Chandada also had the only Women's Wheatgrowers Auxiliary group in Australia and was led by the courageous Mrs. Ardee Cash, an Irish-born schoolteacher. These farmers and their wives were prepared to stay and fight as they did even if there was only half a chance to survive. They didn't mind the hardships and primitive living conditions because they held visions of a better future. But after toiling for many years during the depression hope ultimately faded for them because it was felt the financial system was loaded against them and they felt cheated. It was the iniquitous treatment handed out by both government and banks that took these groups to the steps of Parliament House to fight for justice to be done.
The Debt Adjustment Board, which was initially set up under Judge Paine to deal with the 1930s situation, was completely despised in what was an unforgettable period of ten years when these ordinary people cried out for help. Imagine the mentality of banks when the mother of a new born baby was given a five pound ($10) 'baby bonus' by the government to help nurture and clothe the infant, only to see the banks claim the five pounds ($10) against farm debts. This was changed however after great outcry but it reflects the thinking of banking organisations in their pursuit of profits and power then, and in the financial system still today, for which both Government and banks are responsible when interest rates rise in excess of 20%.
The common thread through both eras has been the total disregard of ordinary people. If this campaign is not recorded and understood and acted upon, we could see a similar predicament emerge in the future - and this must be prevented. We trust this 'Bankwatch' story will assist great numbers of people, farmers, unionists, small businesses and people seeking secure jobs or affordable housing to understand the seemingly implacable forces organised against the interests of ordinary people. This story calls upon the broader Australian community to work together to build fairer and more democratic bank and finance system.
We can move forward with the inspiration of such people as Ron Loveday, who was determined to help when he could and who continued to champion the rights of people against injustice even after the experience of losing his own farm, and knowing the pain of walking away from years of work and sacrifice, a person who knew how to fight for just reforms.
People versus Banks!
As was the usual practice in a small bush community the whole district had turned out for Belinda Dannenberg's party, but the overtone of the drought cast a somewhat gloomy pall over the gathering. No crops, little sheep feed and no cash coming in to meet commitments, Bill Carey, a hard-working family man and one of the community's leaders, was at that birthday party. He would survive the drought without any great problems, but the thought of his immediate neighbours and friends being in such diabolical trouble had a gut-wrenching effect on him.
Knowing that his closest friends were to be ousted without a good hearing from the government or recourse to the banks was more than Bill could bear. But to try to do something on his own would be futile and ineffective. However, Jim Cronin, another Chandada farmer, was home from opal mining at Coober Pedy. Bill grabbed Jim at suppertime knowing Jim was a man of action, and said, "How about coming over for tea tomorrow night? There are a few of the locals in big trouble with the banks. I'll tell you the story then, but it is pretty serious!"
After tea the next night when the Carey children had gone to bed. Bill was most direct and very specific about the actual financial situations which some of his neighbours had discussed with him. Bill expanded on the desperate plight facing Eyre Peninsula farmers. He spoke of the banks' inflexibility; stating that dozens of families could be forced from their properties - some properties farmed by the same family for three generations or more. He started to count on his fingers those in real trouble who had spoken to him about their circumstances and said "the Minister for Agriculture, Kym Mayes, says there is no hope for these people. The Premier, John Bannon was here twelve months ago, wringing his hands, and blaming the banks, but nothing has been done since. The Federal Government won't give us disaster relief because the State Government won't declare the drought a natural disaster! They are not prepared to spend any money in assistance to instigate Federal Relief funding!"
Bill continued in a fiery tone, " The banks are going to pick these fellows off, one by one! No-one seems to care how many of them go! So we'll have to help ourselves. This sketchy outline was enough to make Jim ask himself, 'What is Bill trying to do? He wants us to take on the world!' But, there was no question - something had to be done to try to save these farmers!
It seemed clear that there were only two choices. Either some form of
grassroots action had to be taken in self defence, or large numbers of
Eyre Peninsula farmers would have to leave their land, and those remaining
would be left to wonder how long they could hang on before they too, would
be forced off.
"All right," Jim said. "If we are going to do anything to stop forced
sales and help the others we will have to get organised. We'll need some
help. How about asking Anthony Tomney, Aden Lynch and Patrick (Cronin) to
help us." Anthony, another neighbour, is a man of many talents, who
expresses a lot of feeling for his fellow man. Aden Lynch, a close friend,
with his own financial difficulties, would be prepared to take a risk as
he did in buying more land at what proved to be an inopportune time. He
would not complain, no matter how desperate the situation became. Jim said
Aden and his wife, Josie, would make valuable contributions because they
It was a rare meeting. Usually farmers in crisis tend to concentrate on the negatives - the weather, the banks, the government etc., but Carey and his friends dwelt only on the positive, and agreed that together, they had every chance of achieving a limited objective programme, provided they identified specific goals, and were prepared to think laterally - even unconventionally - in terms of tactics. They would simply make a considered decision about what results were required, and settle for nothing less. Their group was not a bureaucracy; there was no constitution, no minutes, no talk of membership. The leadership was self-selecting. Bill Carey; having taken the initiative, was to serve as chairman. Cronin, who would possibly be more readily available than the others, would serve as spokesman, or secretary. Every member of the group would be permanently available for taking part in both decision-making and necessary action. All the group consisted of was five extremely determined farmers and two objectives - to stop forced sales and to ensure that all farmers stayed on their land unless they wanted to go.
Background to the Plight
When it will not rain or urgently needed showers pass by, it becomes agonising to see the grass and crops dry up and die. Paddocks start to blow dust; in the worst situation the whole district is drifting and roads can become impassable. Stock numbers have to be reduced. Buying in fodder or agisting out sheep or cattle is another cost and somewhat messy. Even worse, there is no grain to sell to meet the annual commitments. Instead of having something to show for the year's work there is no money, only heartbreak!
The Letter from the Bank
In a dryland farming situation, farmers normally receive very few income payments during a year. Harvest is the only comfortable time as the grain is delivered, and is also the most secure time because there is a feeling that at least there is some money about. Wool proceeds are tenuous for many reasons too, because of fertiliser and sundry purchases it is often mostly spent before the wool is sold. Weed spray, water improvements and veterinary items chew into the wool cheque and the bit that is left gets smaller and smaller.
With monthly accounting on stock mortgages, and higher rates than banks, to start with, interest has exceeded 25% with stock firms. This is also a clear case of interest accruing on interest. Or, when signing up for a bank loan, with an established rate of interest done with all due formality the documents are whisked from under your pen and held in security out of sight. You then know for sure the bank has a mortgage over you. As one bank manager told a Poochera client, "Really we own you!" But what is worse; much, much worse, the bank will raise the interest rate without consultation, simply advising you by letter with complete indifference to any budgeting or capacity to meet the increase - to the extent that farmers already in serious trouble meeting repayments after a series of droughts found their interest rates had actually doubled in a few short years.
At the time of deregulation in 1984 Australian banks went on a lending spree to keep foreign banks out of rural retailing. They also went into direct competition with each other to lock up this area of business. In some cases it was not friendly persuasion, but blatant coercion to borrow money. Banks were allowing their managers great freedom in throwing out half a million dollar loans by clients simply telling the bank how much money they wanted or saying to a farmer, "Buy the property, then come in and tell us how much you need." One such farmer went in to see a local bank in 1984 to ask about his chances in obtaining a $20,000 loan to purchase some equipment. The banker said, "I thought you were in to see about your neighbour's place (which was coming up for auction). The answer was, no. The banker then said, "You should think about that property. It is right next door - there is half a million dollars here. Just ring me.
Even if one bank refused a loan to a farmer an opposition bank in some
instances heard about it, chased him down and accommodated him. With
example after example over those couple of years, banks threw money at all
and sundry, pushing up land prices to speculative levels in doing so. In
one extreme example, a very large loan was approved when two banks were
merging, and no cash flow analysis was done on the farmer's capacity to
service the loan or repay it. Now, in case after case, the banks want to
place all blame for the present situation on the borrowers. It is a far
cry from a bank manager telling a nervous farmer's wife, why clearly he
was leaning on them to borrow a large sum of money, You grow the wheat -
and let us look after the money!" This is a long way short of their
responsibility of fiduciary care when a bank must care the same about the
client's situation as about the bank's.
Farmers and their wives were also subjected to personal abuse from bank managers; some instances within earshot of other staff. Some finally had to face up to head office in Adelaide about their situation. For each of five different visits to Adelaide, one couple fronted up to five different bank officers who could not care less what happened to them, and treated them like second-class citizens. These banks would never allow themselves to consider for a moment that any blame could be laid at their doorstep. Jim Cronin recalls many conversations, especially with women on the Eyre Peninsular who spoke as plainly as possible of these sorts of encounters with bank managers and hierarchy who believed the bank was completely right and client was completely wrong.
A Community In Crisis
But it was the churches who seemed to be far more aware of the catastrophic effect of widespread financial dislocation than either the bankers or government. As an example of the commitment they were prepared to make, the Uniting Church at Ceduna released its local minister, Reverend John Richardson, from his pastoral duties so that he could visit farming families in order to offer whatever comfort he could. He had been an Eyre Peninsula farmer himself and was secretary of the Far West Rural Support Group based at Ceduna at the time. In counselling despairing farmers he left no doubt in anyone's mind of the callousness of the State Government and the banks in ignoring the real situation.
When the State Minister for Agriculture, Mr. Kym Mayes, visited the district, John Richardson tackled him about the effects of the drought on people, but Mayes was very evasive as John Richardson discovered, "The impression that people got from Mr. Mayes was that some farmers would have to go, and as far as he was concerned, the quicker the better, ...these people have worked hard and paid taxes all their lives, and now they can't get benefits!"
However, the Rural Assistance Branch of the South Australian Department of Agriculture did have people in the field to counsel and assist farmers in re-financing and restructuring their loans under certain conditions. Tim Scholz from Wudinna, as a rural counsellor, was trying to cope with a situation that was rapidly getting out of control, but the Agricultural Department's rules were simple, if you were unviable - by their definition - you had to go!
The Department of Community Welfare's local officers were also most concerned that farmers who were in debt, and unable to offload their anxieties would resort to suicide. Carrie Gaskin of the Ceduna branch of the Department of Community Welfare, said, The West Coast scenario could evoke tragedies like suicide because the farming community has a sense of pride." Financial problems had led many people to conclude that they were personal failures.
Three years before Belinda Dannenberg's eighteenth birthday - almost to the day - the Brisbane "Telegraph" (24/10/85) reported:
"Seven Victorian Dairy farmers have committed suicide in the past 6
months, as a rural depression worsens. Many farming Communities are
setting up counselling services in a bid to prevent further suicides.
Victorian Milk Producers' Association spokesman, Mr. Norm Flinck, blamed
the situation on increasing debt, and lack of government aid..."
Local doctors were worried about the burden of emotional stress that farmers and their families were carrying. Dr. Richard Jolly, of Ceduna, said that in the end West Coast farmers were being crucified by Federal and State Government incompetence, adding - the Federal and State Governments will do nothing to help these people because, while it's a large area, the population isn't big and none of the farmers would vote Labor in a fit."
Farmers were not the only people feeling the stress. Rural support businesses were also particularly hard-hit. Some local businesses were facing rapidly changing trading arrangements with their suppliers, necessitating quicker payments from their customer For many years, machinery dealers had carried some local farmers, often waiting months for them to pay accounts, or coping with finance companies themselves in keeping up payments, with unsold stocks on the showroom floor. Banks became unwilling to increase overdrafts; large machinery companies had amalgamated, cancelling franchises without notice, and without compensation. As a result, many country machinery dealerships were worthless - without even real estate value. The elimination of country businesses contributes to the death of small towns, increasing rural isolation, and further business centralisation in larger towns and regional centres. It is a common sight in the Australian bush.
The Eyre Peninsula farmers with the increasing publicity about the drought, were becoming defensive about the environment and the so called soil degradation issue. With clouds of dust in the air each day as summer approached more media attention was being focused on just what was happening to this region. It seemed like the questions being asked by city people were "Can't these farmers really look after thei land?' or "Should some of these areas be farmed at all?"
The suggestion that the Eyre Peninsula is of marginal economic value is
not borne out the figures. Traditionally, the Peninsula has produced
approximately 38% of South Australia's wheat crop. Mr. Gunn, the state
Member of Parliament for Eyre, put the case in State Parliament (South
Australian Hansard 16/2/89), - From the 1984-85 report of the Australian
Bureau of Statistics on agricultural commodities, it is interesting to
note that, in the 1983-84 year, Eyre Peninsula produced some $357 million
worth of agricultural products. In the same year, the South East of South
Australia produced approximately $269 million worth. Eyre Peninsula was
second only to the Murrayland which produced some $364 million worth of
production - a clear indication of the value and the ability of that part
of South Australia to produce...."
Even the State's Environmental Protection Council has praised
reclamation achieved by SA primary producers. The Farmer and
Stockowner (18/4/89) reported:
David Smith, author of "Animal Tales" and known for his
involvement in the ABC Science Show, and Earthwatch, makes the following
The destruction of Australia's rural industry had more to do with the policies of State and Federal Governments than with the weather. Financial policies in particular contributed to rural depopulation. Rural politicians have let down their constituents in this regard. Over the many years when the Country Party was governing in coalition with the Liberals, it had an opportunity to fulfil its rural obligations, and to see that financial policies were pursued that would ensure that country areas remained healthy. In 1949, the Country Party platform (Section 37) included,"A credit policy designed to assist primary producers..." This was reaffirmed in 1953, but no significant steps were ever taken to give it effect. As a result of this failure, the bush is dying. It is losing its population, its country businesses, and its valuable production potential through massive soil erosion, destruction of soil structure, and salt encroachment as farmers work their soil hard to service their ever-increasing debts
In 1960, Australia had 290,000 primary producers with a net rural debt of $77 million. By 1970, there were 250,000 primary producers with a net debt of $1,224 million. In 1985, the primary producers were reduced to 170,000, carrying between them a debt of over $6,000 million. But by 1988, farmer numbers had dropped below 150,000 while their debt spiralled to around $8,000 million, and in 1990, $11 billion debt.
An average of six farmers per day are now leaving primary production. Farmers are being destroyed by impossibly high interest rates, and politicians of all parties are, by their silence and inaction, guilty of a "sell-out" to the big bankers. Private ownership of property, and key export industries are being destroyed!
Chandada Lights a Bushfire
On Tuesday night, 1st November, about fifty farmers met at Chandada to discuss the proposals placed before them by the Action Group. The media was placed under an embargo allowing the frankest of discussion to occur. Aden Lynch rejects the suggestion that Bill Carey, who chaired the meeting, "laid down the law". But it was made quite clear that the Action Group had made certain decisions about the policies they were to pursue. They were appealing for support from other primary producers and country people. Constructive suggestions were welcomed, as were promises of assistance.
Feeling against the Government ran high because they were coming across
as not being the least concerned about the Eyre Peninsula. The Minister
for Agriculture, Kym Mayes, was singled out for harsh criticism from the
floor because his government's policies were not producing any acceptable
results and he was being seen as completely antagonistic towards farmers.
A no confidence motion in Mr. Mayes was put from the floor, but the
chairman would not accept it, stating, "It is really the Premier who
should be addressing this problem because he is the Treasurer and the
welfare of all the people in the state is in his domain."
During his address to the meeting, Jim Cronin stressed that the Action
Group had agreed to pursue a one limited objective policy. All other
activity must serve that policy, which was:
An overwhelming motion of confidence was passed in the Action Group and promises of support were noted. A decision was made that no further forced property sales would be permitted and the Group would seek wider community support throughout South Australia to save threatened farms. Bill Carey stated it was essential that each person present return to their own districts and spread the word that a group existed which proposed constructive action to prevent forced sales. Anthony Tomney announced that the time had come to call a halt to the destruction of the bush. "I can't sit back any longer and watch my friends, my neighbours and my colleagues be picked off by the banks one at a time. Banks are writing off huge losses in forced sales, but appear unable to write off losses to keep farmers on their land."
The Group also agreed to seek a moratorium on all farm debts, and decided to ask their Members of Parliament to arrange a meeting with the Premier, Mr. Bannon, as soon as possible to appeal to him to intervene with the banks, to spearhead a restructuring programme based on the provision of long-term, low interest loans for 200 struggling Eyre Peninsula farmers. Press reports following the meeting created enormous interest right across the Peninsula.
It soon became obvious that as the campaign developed, members of the Action Group would have to spend long periods of time on the telephone. Calls of support and offers of assistance began pouring in from all over the Peninsula. A report in the Stock Journal (November 3, 1988.) and a number of ABC radio interviews with Jim Cronin on the Action Group proposals were sufficient to ignite the whole region. At last someone was doing something positive!
However, more distressing calls also began to come in. Desperate farmers who felt that everyone else had abandoned them, pleaded for help. For many, just the knowledge that a stubborn group of resourceful people had decided that "enough was enough", was sufficient to lift morale, and give hope for the farming future. For Cronin, it was becoming increasingly distressing to spend time on the phone with farmers and their families begging for advice. The advice was always the same: "Hang on as long as you can. If we stand together there is hope for us all. Urgent action at the highest level is being taken."
The Action Group effectively became a counselling service, the amount of emotional energy required becoming enormous and draining. The media were extremely helpful. The Action Group was a new initiative, and was obviously big news in the developing climate of rural despair. The Adelaide media were as attentive as local media, and Cronin found that he had to be available at any hour. Sleep became a luxury.
A Test of Strength
Meanwhile the Action Group was faced with its first major challenge - a
forced sale at Cungena. The farmer, Ken Gerschwitz, had two properties.
The agents, Hale Real Estate, were to sell Mr. Gerschwitz's Ceduna
property in the morning (which he wanted to sell) and fly to Cungena to
sell the second property, his home property, in the afternoon. As it
happened, this was a case in which, only a few years before, the bank
concerned had strongly encouraged Ken Gerschwitz, even coerced him, to buy
additional land at Cungena without selling his Ceduna property which he
wanted to do. This, the banker said, would make him more viable. "You will
be a rich man".
A few days before the sale the "Advertiser" (7/11/88) ran an article floating the rumour that certain buyers were looking for very large parcels of cheap land on the West Coast. Bill Carey reacted with predictable heat and made it clear that local farmers would be out in strength to see that Ken Gerschwitz was not forced off his property by the bank. But he also make it clear that they would not be disruptive, nor resort to violence, relying both on moral force and force of numbers to give support to Ken Gerschwitz and his family.
The Day of the Sale
The sale of this property, and the subsequent eviction of Edna and Ken Gerschwitz and their family would not only have weakened the credibility of the Action Group, but the inevitably low price realised on the property would have had the effect of lowering local property values further, thus reducing the equity of local farmers in their properties still further - and equity was the big criteria at the moment in the light of viability to qualify for the Department of Agriculture's financial assistance package. It would simply have been a spark that would lead to a rush of foreclosures on other local properties as banks panicked and tried to cut their losses.
The Action Group then began preparations to meet the Premier, fully aware that the whole campaign could hinge upon the case that they placed before Mr. Bannon. The deputation from the Action Group would consist of Bill Carey, Jim Cronin and Anthony Tomney.
The United Farmers and Stockowners
The UF&S spokesman, Mr. Pat McEwen, Chairman of the Economics
Division of the UF&S said, "The plan offers banks a chance to minimise
the significant losses they would face if they tried to foreclose on 400
properties (the approximate number owned by farmers in trouble) and
released these farms onto the market, which would inevitably cause a crash
in land prices. Under the plan, the banks would revalue currently unviable
properties down to the realisable market value. Any amount owed by the
farmer above this new valuation would be set aside to become an unsecured
debt with a five year holding period. No interest would be payable on the
set-aside amount over the first five years. If property values rose during
this period, the banks would be able to claim half of the set-aside amount
as an unpaid debt, to be repaid by the farmer through increased borrowings
or land sales. The other half of the set-aside amount would be claimed by
the banks as a loss incurred in the course of their business, and would
bring the appropriate tax concessions."
Mr. McEwen said, "The plan also called for farmers ineligible for the
debt-transfer programme to be given access to the Rural Assistance
Branch's existing programme offering loans of up to $250,000 at 8% for the
first three years, to buy back their own properties, provided they could
prove viability under such a loan programme. It would be better to have
farmers with local knowledge and skills buying back their own farms,
rather than have people without dryland management skills buying in," he
said. The UF&S proposal was constructive and workable, given
sufficient goodwill on all sides, and a genuine desire to see farmers
remain on their land for a chance at one more cropping season.
The UF&S proposal was to be placed before the Ministerial Working Party for consideration. The UF&S also proposed a change to Part 10 of the Australian bankruptcy legislation, to reflect provision in Chapter 12 of the United States legislation, which gave the farmer certain negotiating rights, and perhaps enable them to re-structure their debts and modify the terms of their loans without the consent of all creditors. This, however, required complex legislative change, and clearly the farmers did not have the sanctions to force such changes.
Meeting the Premier
The Action Group found the meeting largely unsatisfactory. There were too many groups represented to have their proposals and requests properly addressed. Jim Cronin did have an opportunity to appeal to the Premier to intervene with the banks to stop forced sales of properties and pointed out Mr. Bannon was the man to do it, as our leader. Mr. Bannon threw his arms in the air in mock horror, asking "Why me?" and laughing with his ministers. No satisfactory undertaking was given by the government.
The Premier pointed out that Mr. Mayes would again be meeting with the
banks, finance companies, stock firms and the UF&S and other groups in
the near future. This group making up the Ministerial Working Party would
negotiate with the banks and report in the new year, and the UF&S's
proposal would be considered.
The results of the drought were obvious. Everywhere on the peninsula farmers should have been preparing machinery for harvest. Few were doing so. The pathetic yields available simply didn't justify the expense of running the machinery in many areas. Large numbers of farmers would attempt to harvest sufficient for seed for the following season, but many would not even be able to do that. The onset of the hot summer months would bring additional problems of providing feed and water for remaining stock. Very little hay was cut in the spring; the growing conditions simply did not occur. And still the State Government refused to declare the drought a natural disaster. For the farming families, facing a hot, dry summer, no incomes and little chance of an annual holiday, the Bicentennial Christmas prospects were bleak indeed.
The Action Group, still receiving a steady stream of calls from desperate families, struggled to keep their own stock alive, and discussed the next initiative. Clearly they would have to tackle the banks themselves if nothing came of the Ministerial Working Party. In the meantime, Carey and Cronin were determined that no further forced sales would take place.
The South Australian Government
The intransigence of the South Australian government was attacked in
the Federal Parliament by Mr. Bruce Lloyd, Deputy Federal National Party
Leader. The Advertiser carried the report, (12/11/89),
While Mr. Mayes maintained that disaster relief was not available to
'unviable' farmers, the Federal Agriculture Minister, John Kerin said
otherwise. The West Coast Sentinel quoted Kerin (18/1/89),
Tim Schwarz, a 'marginal' farmer from Maltee said; Stock
Mr. Mayes has consistently referred to a figure of between 100 and 300
farmers who were 'unviable', and had to be forced from their properties.
For example, in a special article in the Advertiser (21/11/89) in
which Mr. Mayes answers critics, he writes,
However, it took a feature article in the Advertiser (November 16, 1988) by Adelaide University geographer, economics graduate and Streaky Bay farmer Ron Hill to raise an interesting question..., 'What happened to all the drought relief funds, from previous droughts?' Ron Hill suggests that West Coast farmers had received a raw deal from the Government in terms of drought relief. He points to the fact that through previous droughts in the 1970s Federal Government relief funding came from Federal Government to South Australia under very favourable terms and the drought relief assistance loaned out was paid back by farmers to the state and a substantial pool of relief funds would have built up.
Apparently, rather than maintain this as an important reserve pool of drought relief funds for future use, the accumulated funds were shifted by successive State Governments into general revenue. The millions of dollars that could have been used for future relief programs have now been lost. These funds could have made a substantial difference to battling farmers and their families who have been forced through lack of assistance to walk away from their farms, communities and their livelihoods.
Official Policy - Get big or get out!
Never, at any stage, did Mr Mayes suggest that the most vulnerable 200
farmers were incompetent, either in farming practices or financial
management. Why then, did he insist again and again that they had to go?
Because the figures looked bad? The equity figures, interest rate figures,
or mortgage levels? If this was the case, who was responsible for such
things as extremely high debt, and suicidal interest rates? Would the
bank, and even the Federal Government itself (responsible for financial
policy), accept any responsibility? The only possible conclusion to be
drawn from the Minister's inflexible attitude is that the Labor Government
had adopted as official policy that farmer numbers must be reduced for
agriculture to become 'efficient".
The following Editorial from the Advertiser (7/1/89), which Mr. Gunn, the Member for Eyre, read to Parliament in February is instructive, "The State Government's proposal this week for a so-called aid package to help the 400 farmers in the drought-stricken Upper Eyre Peninsula was a final admission from the State that farmers can expect nothing more than token support. After two years of crisis talks between rural representatives and the Minister for Agriculture, Mr. Mayes, the Government has done what it proposed to do all along. The United Farmers and Stockowners have warned repeatedly that some 200 West Coast farmers would be forced to walk off their properties by April 1990 unless the Government agreed to a realistic funding package. Mr. Mayes' aid package simply wrote off 100 of these farms as being 'unviable".
In January, the Ministerial Working Party effectively broke down after a failure to reach agreement between all parties involved about the best way to handle drought relief. The Government through the Minister for Agriculture, effectively stuck to it's guns maintaining that as many as 200 farmers must leave the industry.
Since before Christmas 1988, farmers had been receiving letters from
the Department of Agriculture, advising them of either interest rate
penalties or the failure of loan applications for last-resort assistance.
For example, "Dear Client, We propose to increase the interest rate on the
balance of your loan, not yet due - to....as from the 1st of February..."
or "Following assessment of your application for financial assistance, I
regret that, on the recommendation of the Rural Assistance Branch, the
Minister of Agriculture has declined your application...."
Following the breakdown of the Ministerial Working Party, the Department of Agriculture, through the Rural Assistance Branch, distributed a document to householders on the Eyre Peninsula, entitled, "Government Assistance for Farmers on Eyre Peninsula". This document, widely criticised in the bush, set out the Minister's proposals - broadly the same as the proposals circulated in December. The document was met with contempt on the West Coast. The West Coast Sentinel (2 5/1/89) carried an article headed: Minister 'trying to flog goanna oil'. The article made it clear that farmer representatives rejected the financial proposals as 'snake oil' and again demanded that the area be declared a natural disaster area.
Jim Cronin, from the Action Group, again made the point that low interest loans were available to buy out existing farmers, but were not designed to keep those farmers and their skills in the industry. "I cannot see that aid packages are a cost to the South Australian taxpayer, because interest on Rural Assistance Branch, (RAB) loans goes back into State coffers," he said.
The State Government Profits From The Drought
On the other hand, the Action Group simply insisted that only one result was satisfactory: that every farmer who wished to remain, and plant a 1989 crop, should be assisted to do so. The policy of both groups were the same. The tactics were different. It is impossible to be diverted or defeated if a stand is taken on policy as the Action Group did. They simply refused to be diverted from that policy.
After many desperate primary producers applied for RAB assistance, and were turned down, and others had interest rates jacked up, the Stock Journal (9/2/89) also published a blast at the Rural Assistance Branch: "RAB 'insensitive to farmer needs'". The report consisted of a stinging criticism by a spokesman for the UF&S following their Cowell conference.
Lack of Understanding
Even the most fortunate of farmers are finding it difficult to sustain any progress whatsoever No matter how innovative they become... Thanks to gross Federal Government neglect of its duties to protect Australian industry and the economy, there is no low cost machinery now. In an industry such as farming where replacements are a continual problem, some primary producers take out more finance on equipment thinking somehow they have saved themselves some money at the end of the day while minimising tax. (Pigs may fly!)
Action Group Support Grows
The Action Group began to feel increasing pressure to take the initiative. Support was slowly growing, as one after another farmer found either the RAB or the banks jacking up their interest rates. Some were unable to secure funds at all for another crop, or stock retention. Media interest remained high. Support began to arrive from unexpected sources. A facsimile eventually found its way to Jim Cronin from the United Trades and Labor Council in Whyalla, expressing support.
On January 5, 1989 the UTLC Branch had met, and passed the following motion, 'That this Council write to the South Australian Labor Government through the Minister of Agriculture, advocating maximum support for the plight of farmers on the West Coast, and their terrible debt problems. Further, we publish this decision in the "Whyalla News." It is a sign of crisis indeed, if traditional antagonists like farmers and unions find common cause - especially against a Labor Government!
The motion of support was moved by the Seaman's Union, and seconded by
the South Australian Institute of Teachers. The resulting media reports
raised widespread interest in other quarters, especially in Adelaide.
Communication between Jim Cronin and John Lesses, Secretary of the United
Trades and Labour Council of South Australia, revealed that unions and the
farmer community shared more grievances than a superficial study would
reveal. Interest rates, for example, were punishing home-buyers and as
readily as farmers, and rising costs, heavy taxes and poor services on the
Peninsula were common causes for complaint. John Lesses asked Jim Cronin
if the Action Group could prepare a submission on primary producers'
problems to be forwarded to the ACTU with a view to some form of common
action. "You blokes are making good sense to me," said Lesses on one
occasion. "We will look at ways to support you", he said.
Meanwhile, the Action Group was under pressure from many other directions. Cronin was constantly on the phone, day and night. He was travelling long distances at all hours. His brother Pat was a pilot with his own plane, which gave the Action Group a mobility advantage. The Action Group was also in contact with Senator Paul McLean, Democrat Senator for NSW, who was campaigning on corruption in banking circles. McLean had a thick sheaf of affidavits from bank customers who had strong grievances against several banks. They claimed that the banks had 'ripped them off". The Action Group was also under pressure from farmers to organise a rally that Bill Carey had foreshadowed before Christmas.
There appeared to be tremendous support for such a rally as Aden Lynch explained to the group, but Carey and Tomney were reluctant to hold a rally just for the sake of doing so. Some way had to be found for the rally to serve a positive purpose. Their attention began to turn to the banks. Could a rally be used to launch a moral assault on the banks in an attempt to force them to accept some of the responsibility for vicious financial injustices?
Tomney, Carey and Aden Lynch began to work on a possible programme to force the banks to back down. Some farmers were beginning to receive foreclosure letters. Others were having their interest rates jacked up 2 or 3% because they were 'high risk" clients. Aden Lynch suggested that the farmers take a leaf out of the burgeoning environmental book, and borrow from the "Earthwatch" concept. Thus, 'Bankwatch" came into being.
The Mayors Appeal
The Churches Contribute
Banks Get Tough
He contacted a journalist from the Sunday Mail - Peter Morgan, and 'leaked" a story that the Action group was in the process of preparing to take direct action. (Sunday Mail 8/1/89). The State Manager of the first bank to foreclose on a farmer, or force them off his property, would find that farmer, and their family, chooks, and pets, camping on the front lawn of their Adelaide home within 24 hours. Farmers have no-where else to go," said Cronin. "We are remaining on our properties, where we belong, or we are camping on the banks' property, where we do not belong. We mean business!'
The result was dramatic. On Sunday 8th January, the front page headline of "The Sunday Mail" was: 'BANKS GET TOUGH ON FARMS', including the threat that farmers would begin camping on the lawns of State Manager homes in Adelaide of culprit banks. Cronin's allegations that banks were jacking up interest rates were quoted. Specific examples were detailed , which were confirmed when the Sunday Mail checked them.
Cronin pushed hard, quoting another specific case with a Boxing Day deadline to pay up (or else!) One farmer said, 'It makes me wonder what the bank hopes to achieve by increasing the debt burden at this time, unless it is thinking of writing it off for some form of tax concession. This is happening. Banks are raising the debts of clients and are claiming trading losses. There is a lot of paper shuffling going on...," The banks issued blanket denials.
Cronin had struck a raw nerve. But the result of the article was that pressure on farmers was eased immediately. The banks, in the face of an emotional public campaign, including the possibility of farmers camping on their lawns, backed off instantly. This concession simply allowed the Action Group breathing space. A few days later Cronin was phoned by Mr. Arthur Whyte of Kimba. Whyte, a former Legislative Councillor for the region, urged the Action Group to pull out all stops, saying that no one really took the Eyre Peninsula farmers seriously. "They're laughing at you, Jim," he said. Cronin was infuriated. He assumed that Whyte meant both the State Government and the banking industry.
Cronin, calling on an iron determination, the steel of which former footballing opponents can well testify, silently determined that the farmers would have the last say.
Appeal To The Governor
The Action Group was determined to test whether the Governor would consider the plight of the Eyre Peninsula farmers to be a matter of injustice on the part of the State Government. They were confident that they could demonstrate such "extreme circumstances".
Jim Cronin and Bill Carey went to Adelaide to petition the Governor on January 13th. As it happened, the Governor was away from Government House on that day, and the Action Group had to be content with presenting the petition to a gate attendant. In fact, in order to satisfy television and print media, the petition had to be presented more than once to a bemused attendant! The impact of media coverage of the episode was considerable, sparking radio talkback discussions with University Professors and Readers in Political Science and History, especially as Cronin explained the reasoning behind the petition.
Explaining to the press that the Action Group relied upon the 'reserve powers' of the Governor, giving him discretionary powers to act to maintain a safeguard against malpractice and injustice, Cronin said: "We are informing His Excellency that the Government is not effectively addressing the concerns of this region, and we have no alternative BUT TO COME DIRECTLY TO THE CROWN AS THE FINAL APPEAL OF THE COMMON PEOPLE. His Excellency may then instruct Mr. Mayes as his minister to initiate appropriate and immediate action to stabilise the tragedy unfolding in this important agricultural area."
Debate On The Role Of The Crown
The Action Group also appealed to the Governor to instruct the Government to stabilise the situation to prevent a run of foreclosures, downgrading land values, and placing more farmers at risk as their equity evaporated with falling values.
Bankwatch Support Grows
Interest Rate Register
The"West Coast Sentinel" (8/2/89) picked up the story:
The Wudinna Rally
The Port Lincoln Times carried a full report of the meeting, consisting of the entire front page of its February 14th edition, "the common needs of these people were welding them into a community where personal benefit was being put aside so that neighbours could be helped, a collective atmosphere reminiscent of the sacrificial days of World War II. The mood was sombre. Despair was giving way to determination, actions were outlined in which every person could participate..."
Jim Cronin told the crowd that, in launching 'BANKWATCH' the Action Group had a number of action proposals. The first was to hit the banks directly, through a boycott, by shifting accounts from the Commonwealth, ANZ, State Bank, and Westpac. (The National Australia Bank did not have a significant banking profile on the West Coast.) He said that some would be unable to shift accounts, but those who could were urged to do so within a week; every time an account was closed it would demonstrate to the banks that a solution to the bank and government-caused crisis must be negotiated. "The banks have a grave area of responsibility and they have told us to get lost. But we refuse to be left bashed and dying on the West Coast." said Cronin. (Port Lincoln Times, 14th February 1989.)
Chairman, Bill Carey said he was prepared to live in a caravan and doorknock the entire Eyre Peninsula to get adequate response to force banks to negotiate. He appealed for a list of volunteers who would be available for doorknocking, and for other unspecified action in about ten days. Carey said he would be moving his accounts from the bank used by his family for 64 years. He told of a recent experience when his bank had levelled grossly unfair charges because his account was overdrawn for two days, "After 64 years with the bank, we evidently did not have a good credit rating."
The Action Group appealed to farmers to let them know of any threats of forced sales repeating that no farmer should be driven off their property without a chance to crop in 1989. Other speakers made suggestions, and two motions were passed. The first called upon the Government to declare a natural disaster, so that funds would be available for stock agistment and fodder subsidies. The second motion commended the Action Group, and promised support for future action. The UF&S speakers were critical of the government, and Mayor Tom Secker was warmly welcomed. His Fund had now exceeded $100,000, raised from other councils, service clubs, churches, and other individuals. The fund was being disbursed to needy people for groceries, stock-feed, transport, freight for donated hay, etc., by the Rural Crisis Committee, in consultation with the Mayor. Still no government, stock firm or bank had contributed.
The Wudinna Rally received widespread support throughout the Peninsula, the State and across Australia. Groups from as far afield as Warracknabeal in Victoria, and Wodonga were requesting advice and information. Again, Cronin and members of the Action Group were in heavy demand by the media. Cronin was even attempting to do radio and television interviews even while other speakers were still addressing the Rally.
The "West Coast Sentinel" (15/2/89) summed up the Rally, "The rally ... was the ultimate pledge of unity in the battle with the banks and the State Government for support."
In the week following the rally, information poured into the Bankwatch headquarters, Cronin kitchen. The telephone was in constant use, and a solid picture began to build up of hundreds of rural people closing down bank accounts, from school children to pensioners. Building societies and credit unions were inundated with deposits, and had to assign additional staff to service new accounts. In particular, the NACOS Eyre Peninsula Credit Union did a roaring trade, as did the National Bank in Port Lincoln. The banks, stunned by the assault, had no answer.
New Campaign Phase
The Governor agrees to visit
This placed immediate pressure upon the government since the Minister for Agriculture was responsible to the Crown. "The Advertiser" (14-2-89) carried a report on the proposed visit on 14th February, 1989.
Picketing The Banks
Media interest was widespread, again. television, radio and newspaper reports of West Coast Banks being picketed went across the nation. The Bulletin (2/5/89) in its feature article on banking, published an article, with a photograph of picketing farmers. The Bulletin recorded that the banks, having been extremely free with credit in past years, were now beginning to panic. Cronin was quoted: 'When people questioned their ability to repay (loans), the banks said, 'You look after the wheat, and we will look after the money.' Now it's a bit like a shotgun wedding. They had all their fun, but didn't want to accept the responsibility.'
On the picket lines, staffed by over 180 volunteers, bank customers were asked to postpone their banking business until another day. Customers were not prevented from crossing picket lines if they felt they had to do banking business, but were handed a form outlining bank charges to beware of, and requesting that the customer consider closing an account. The response was excellent. Anthony Tomney reported that an English woman and a Western Australian couple, not having much sympathy with banks, even volunteered to join the picketers at Streaky Bay!
The Action Group continued to receive strong support, and a high level of media attention. Senator Paul McLean. N.S.W. Democrat, sought a meeting with the Action Committee, and as a result, Cronin went to Adelaide to meet McLean on Friday, February 24th with a view to participating in McLean's anti-corruption campaign in the Senate. Cronin came back impressed with some of Mclean's evidence of banking corruption, and invited McLean to speak on an Action Group platform in Adelaide the following month. McLean agreed.
In order to take their message to the city, the Action Group contacted the U.T.L.C. who had previously supported the farmers, inviting them to speak at a public meeting late in March. As well, a number of union officials agreed, as did representatives from the South Australian College of Advanced Education students' union, the small business association and a homebuyers mortgage action group. Senator McLean was to be the keynote speaker.
Meanwhile, banks continued to place pressure on the most vulnerable farmers. UF&S was compiling a register of farmers who had been refused carry-on finance to crop again in 1989. The Member for Eyre, Graham Gunn, was passing on foreclosure letters from the banks to the Minister for Agriculture, Mr. Mayes, to be forwarded to the Premier in order to maintain pressure for relief. There were, however, very few buyers for land in any case, high interest rates and determination of the action Group and their supporters saw to that. The banks began to change their tack. Properties that could demonstrably not be sold, would be leased back to the owner by the bank, under an agreement permitting the planting of a crop. It appeared that a stalemate had been reached.
The Governor's visit
The Advertiser (22/3/89) carried a report on the Governor's visit by road, in the Viceregal Rolls Royce. The Governor heard how farmers, struggling to pay off huge debts, had unsuccessfully pleaded for months for Government action to reduce their 22% and higher interest rates. Sir Donald was briefed on the devastating effects of the worst drought in living memory. He listened attentively while the farmers described how Coorabie, once a premium wheat producing area, had turned into a dust bowl, and that most of its inhabitants faced financial ruin. Mr. Alan Stott said Sir Donald had been very interested in learning about the district's problems, which was much more than the Agriculture Minister, Mr. Mayes had ever done.
The Action Group's secretary, Mr. Jim Cronin, and Chairman, Mr. Bill
Carey, expressed their concerns to Sir Donald at dinner in Streaky Bay.
Mr. Cronin, who had spent only one day of the past five months working on
his own farm, because of campaign commitments, later told The
Advertiser that banks had misled farmers by giving them incorrect
advice. While the Governor denied that he could exercise any direct
powers, the fact that he had taken the matter seriously, and had taken the
time to observe conditions at first hand, was a tremendous boost to West
Coast morale. He had spent three days listening to grievances, and had
never once condemned farmers for incompetence - nor passed judgment on
banks. "One talks with ministers of course and so on. Now I will be able
to talk, having seen it," said Sir Donald. "With that background, I will
find it very useful."
The Adelaide meeting
The goodwill between the farmers and the city dwellers was assisted by
the generosity of West Coast graziers the previous week when they had
provided a total of 145 sheep for Easter hampers for needy Adelaide
families. A truckload of sheep of surprisingly good quality had gone to
the Murray Bridge abattoirs under the UF&S "Country Caring" programme,
and helped to provide 1000 Easter hampers. Farmers donated sheep, a
carrier had trucked them free of charge, and Mobil Oil Co. had provided
fuel. Significantly, Union slaughtermen donated their time free at Murray
Monster auction nets $600,OOO
Eyre Peninsula Action Group Chairman, Bill Carey, paid a tribute to the people from the mainland, especially Peter Rayner of Murray Town who made the event a success through his expertise in advertising and organising promoters. All the expenses of the day had been met from the sale of food and drinks donated from the mainland, with the volunteer auctioneers giving their time free to help maximise returns to farmers. Peter Heath and a band of Kyancutta farmers worked tirelessly and professionally to present the catalogue. NACOS Credit Union supplied the book-keeping staff and kept a check on sales dockets and cash. Mr. Carey said the Laura-Wirrabara Football Club staffed the beer stand, selling stubbies donated by the SA. Brewing Co. and hotels throughout the Wirrabara, Melrose and Port Augusta region. Murray Town farmer Lyle Woolford, organised the collection of sheep from the Peterborough-Jamestown region, and was overseer for the barbecue. EP Action Group spokesman, Jim Cronin, said items of plant passed in on sale day were still being sold to new owners in the days following the auction. Mr. Cronin said with the sales that had taken place before the auction, the total proceeds would now exceed $600,000. Generally, vendors were very happy with the results, and buyers from outside the region took most of the machinery," Mr. Cronin said. Elders at this time announced through their Port Lincoln manager John Semmler, they were providing $18,000 of seed pickle which went out to desperate growers who didn't reap any crop. This linked in with the U.F.&S. initiated seed pool scheme of seed donations from throughout the state for these drought victims. An imaginative ongoing example of farmers helping each other.
The future of many Australian industries will depend upon how Australia organises its financial system. Will we continue to go overseas for our credit to operate the economy, or will we begin to release some of our own credit, as a sovereign state should? Financial policy determines the degree to which Australia is dependent upon other nations. To maintain or establish reasonable control over domestic economic policy it is vital that we regain some economic independence through ensuring that our reliance on foreign investment does not compromise the Australian communities' capacity to plan and manage the economy within a globally dependent economic system.
In such an interdependent country, there would still be a place for the commercial bank. The competition between private, commercial, Australian-owned banks would be vital for a stable economy. While government must be firmly in control of financial policy, banks fill a valuable role of service to industry and the individual. However, that role must be as a financial servant, not as a finance master! Even in the present chaotic environment, individuals can still get good service from banks, as long as they refuse to be intimidated. The Bankwatch campaign demonstrated that.
After the election of the Hawke/Keating Government in 1983, the deregulation of the banking system became a high priority; the internationalisation of the Australian economy. Sixteen new banking licenses were offered, some to huge international banks. The Australian dollar was 'floated' (except that it sank like a stone). Conveniently, this was at the time that the international banking groups were buying their Australian assets - they got them for about half price. It is significant that Keating, only days before the election, opposed deregulation.
"The Age", February 1983 records Keating, "As to the argument that foreign bank entry will increasingly link Australia to the general instability of the international banking system, and lessen a Federal Government's control over domestic monetary policy, there is no doubt that this must be the case...." Keating added that foreign bank entry would "inevitably" push up interest rates. He was right!
After becoming Treasurer, and visiting New York, Keating totally changed his tune on deregulation. No reason for his reversal was ever given.
Banks go on a lending spree
According to a major article by Stuart Kennedy in The Bulletin"(2/5/1989), titled "Why the Banks are Bastards", the effect of deregulation and profit hunger has had a dramatic impact on bank managers in the field, "Stress is increasingly a serious problem in banking, and part of it is because of the pressures of deregulation." Managers' salaries used to creep up with length of service. Now they're paid a base rate, and a bonus for performance... Senator Paul Mclean feels the performance whip is a factor driving managers to forsake ethical banking practice. "I have got ex-bank managers who are saying that, when you have got it put on you for a 30% profitability gain a year, that's potential for corruption", he said.
Len Hingley, Secretary of the Australian Bank Employees Union agrees
that banks post-deregulation efforts to push credit have been over the
top, but he adds that we also have entered the age of the fearless
borrower. The South Australian Premier, Mr. Bannon charged in 1988 that
West Coast farmers had been lured into large financial commitments by
banks prepared to lend a lot of money. The Deputy Manager of the
Commonwealth Development Bank, Mr. Peter Frazer defended the banks in
"The Advertiser" (7/10/88), "Following deregulation of the
financial system, banks became better able to accommodate lending
previously not possible. As a result, willing lenders had negotiated loans
with willing borrowers..."
Mr. Gunn, Member for Eyre, addressed the issue in the House, South Australian Parliament Hansard (16/2/89), "Banks and other financial institutions have not only a commercial responsibility, but also a social responsibility. In many cases they encouraged people to enter into arrangements and contracts, and virtually begged them to take money. (To buy more land). One bank went into the West Coast to attract new business, and handed out money as if it were going out of fashion. Now, that same bank is attempting to force people off their farms".
The Commonwealth Development Bank has been the most difficult to deal with. It was set up by the Menzies Government to assist agriculture and development in this country, and it went out and lent money. It is now attempting to force people off their land and I believe that should not be occurring..."
So far, the Australian Federal Police have made little headway in prosecutions, and McLean appears to be belting his head against a brick wall. The other political parties have not yet supported him. Presumably they still have election campaign debts from previous elections; debt owed to the very banks Mclean is investigating! The interest rate practices are a scandal.
Interest rate practices
Salmon says customers rarely recognise the difference. "More often than not, borrowers have not got the expertise to determine what rate they are being charged. When the change comes from the market point of view, the rate is automatically put up by the computer for all borrowers; people accept it. It gets to the stage where most borrowers would not have a clue what they are being charged by the bank.
The theory of deregulated interest rates holds that the rates rise and fall with the market price of funds. While rates always rise, they do not always fall. There was a downward trend in interest rates in early 1987 but, according to Salmon, customers in some National Australia Bank Queensland branch regions, were not given the benefit of the trend. Managers were informed by phone in some instances that interest rates were shortly to drop. As soon as they were aware that the base rate had moved downward, they were to offset the drop by increasing the borrowing margin by a like amount. Borrowing customers, of course, thought they had benefited from the market trend. The regional managers' instructions on this issue were in turn handed down by the general manager for Queensland.
The Bulletin has spoken to a retired NAB manager who confirms
the substance of Salmon's allegations. Salmon now advises customers
running court actions against banks. In three cases, he says that bank
officers have "conspired to pervert the course of justice" by all or a
combination of the following:
According to research, banks could afford lower mortgage and interest rates. A confidential report by Melbourne stockbrokers McIntosh, Hanson, Hoare, Govett indicates that banks are making double the profits of foreign counterparts; "The McIntosh report showed that in 1988, the National Australia Bank earned an average of 13.7% for its money while at the same time paying its depositors an average of 9. 1% - a profit margin of 4.6%. The same year, Westpac recorded a 3.8% profit margin by paying an average of 9.4% to depositors, while receiving money for 13.2% on loans. A similar average profit margin was likely to have been recorded by the ANZ and Commonwealth Banks.
According to the report's author, McIntosh analyst Mike Macrow banks in Britain, the U.S. and Canada had 1988 profit margins of 1.5% to 2%. The average difference - 2%-3% could have been carved off the Australian mortgage interest rate, now set at 17%, dropping it to around 14%" No wonder the "Daily News" report was headed: GREEDY BANKS IN HOME LOAN ROW. Daily News, Western Australia, 1989
The vicious debt cycle
Farmers were reluctant to borrow at such high interest rates, which meant that the land values of any property that was sold, began to decline. This meant that heavy borrowers began to see the equity they held in their properties evaporate before their eyes. For anyone under the RAB it virtually then became impossible to service loans, as such farmers were regarded as "unviable" by the Department of Agriculture in South Australia. No Rural Assistance Board finance was to be made available to "unviable" farmers to plant a crop in 1989. Banks then began to foreclose, and wondered why there was growing rural resentment toward banks and financial institutions!
Some farmers on the Eyre Peninsula are paying up to 6.4% more than their neighbour this 'risk loading' is put on the worst-off farmers, building up their unpayable debts. A letter from one bank notified a farmer that further to consultations, it was lifting the mortgage rate by 2.2%. There were no consultations. This farmer thought they were in a desperate enough position already, with very little income this year.
This obligation on the part of the banks is otherwise known as "Fiduciary Duty. It refers to the bank's obligation to treat their clients' interests as equal to the bank's own. It is obviously justifiable and essential to ask if the banks on the Eyre Peninsula are observing their "Fiduciary Duty"!
The Creation of Credit
Mr. Santamaria has hit upon a vital part of banking. Bank assets have grown at a rate of 23% over the past 2 years - 1987-88 and 1988-89. The creation of credit is the key not only to the ownership of increasing assets by banks, but to the tyranny of foreign debt and all that goes with it!
It has been clearly established, in Australia and other countries, that
the banking system creates credit. In 1937 an Australian Royal Commission
investigated Finance and Banking. In his summing up, the Chairman, Sir
Mellis Napier, of the Royal Commission stated,
The war-time Labor leader, John Curtin advocated the use of national
credit. In a speech in the Sydney Town Hall at the outbreak of war, Curtin
The British historian, Sir Arthur Bryant had a clear understanding of
the use of new credits. In "The Illustrated London News", March
1983, Bryant wrote:
There is a great case for changes to be made to the financial system. For Instance in the recent publication 'Democratisation of Money', Chas Pinwill, examines the Reserve Bank's summary of the increase in money and the accumulation of banks' assets. Pinwill, C., "Democratisation of Money".
Who's Making Money - And How Much?
If, on 30th June 1988, you counted up all the Australian dollars in existence, you would find there were 130.2 billion of them. Somebody actually did it, and that's the answer. And exactly one year later, the 30th June, 1989, they did it again, and this time there were 165 billion of them. There were an extra 34.8 billion Australian dollars in existence. Where did they come from?
They were simply created in the banking system by the normal mechanism of extending extra credit to people. Well that's okay. We need a mechanism. It's a very simple, efficient, well-organised system. But should they then keep all the proceeds? They do now!
From today, until this day next year there will be an additional 34 billion Australian dollars or more created - more than $2,000 for every one of the 17 million Australians alive. Thinking of it in households of an average of four people, that is more than $8,000 for every Australian household. When next you take a drive through the city, or out in the country, every time you see a home, say to yourself, "Ah, another $8,000 was created just this last financial year"
Bank Robbery? - It Sure Is!
Well of course, the banks are embarrassed. But we only hear about them being embarrassed about profits. The total trading bank profits for the last financial year were over the billion dollar mark. Bank assets growth in that year amounts to $2947 per citizen and to over $1 1,788 for every Australian household.
The Eyre Peninsula struck back with a good season in 1989/90 and grew 10% of the Australian wheat crop. But very little has changed financially. Reports coming to the Action Group still contain the same ingredients of despair as at the height of battle. However one of the things achieved by the Rural Counsellors, Farm organisations and Community Welfare people working in the field with these debt-stricken people is that the essential causes of this great debt problem can now be clearly defined. The answer of course, is that in Australia we have a system of financial control and direction that apparently cannot be challenged even if it wrecks our industries and people's lives in the process.
Some farmers have already been forced off their land and had to seek employment elsewhere. Many others are destined to follow soon if no realistic government intervention is forthcoming as this hard-pressed group of two hundred is still in deep financial trouble and trying to hang on.
All sectors of Australian society, be they homebuyers, small
businesses, large industry or farmers, are still reeling from the impact
of viciously high interest rates and overbearing control of their lives by
banks. The majority of politicians say not one word and pretend the
problem does not exist. A recent letter from a banker to a client is a
damning indictment in itself, telling the farmer and his wife they will
let them farm for another year but suggest they should 'offer' the farm
for sale. The farmer has no equity left in his land whatsoever. The bank
too easily gave money and pushed them to purchase another property in a
lending spree but now accepts no responsibility for their
They were, however suckered into buying another property by a fast-talking Bank Manager hell-bent on a higher salary and personal promotion and now neither his bank nor the Government will acknowledge any responsibility for the overall predicament. Interest rates were half what they are now when the farmer agreed to borrow and who knows what the risk loading percentage was that he was never told about - 1.75%, 2.5%, 6.5%, or maybe 10.5%? It's anyone's guess. Now the debt is so great and unrecoverable we can clearly foresee one day soon that they will have to drive out the gate with a few miserable possessions or the sheriff is sent in to evict them.
They will be able to keep the furniture if they go quietly.
The Action Group repeatedly asked the Government to set up an emergency structure involving the Government, the banks, and farmers to examine how people can be helped to keep their farm. For example, it was suggested that the extra piece of land that the bank had loaded this family up with, be sold off to enable them to remain on their original farm. Such proposals have met with no adequate response. It seems that the present banking system must apparently be upheld at all costs. That our Government is subservient to the banks is now undeniable.
The Government's policy of making cheap money available for someone else to buy this family's farm, but no cheap money to let them stay and trade their way out of trouble, is both bizarre and cruel. This policy serves only to divide the rural community placing farmer against farmer, neighbour against neighbour. The stigma created sixty years ago, by judgments made on farmers or businessmen who were regarded by the financial system as failures, will re-emerge. In those times people had their possessions virtually given away to others. They were given no guarantee that their residual debt would not be pursued by the bank for the rest of their life.
When the final blow comes to farmers banks conveniently maintain their distance in arranging farm sales. Instead of advertising a farm as a "bank" sale, the real estate agent is emerging as the go-between, soliciting offers from neighbours, with the debtor sometimes not being consulted until a sale is 'fait accompli', and so avoiding bankruptcy hearings.
Our Financial System
A Policy waiting for Action
Social Credit: This section of the webpage has been set aside for those who truly want to understand why, in a world of such obvious plenty, why is there such poverty, misery and despair? Why are there countless voices crying out in the wilderness of human misery, frustration and insecurity? Not only do the concerned truly want to know why there is such poverty, misery and despair, but want to help in the restoration of families and communities; especially their own.
The prostitution of the role of money in the market place
An Idea Whose Time Has Come by Anthony Cooney
In the introduction to his book, Clifford Hugh Douglas, author Anthony Cooney explained to the younger generations: "It may astonish the young people of today to learn that when, fifty years ago, I first attempted to share with others the truth about money, which I had discovered in the works of C. H. Douglas, people would smile kindly, pat me on the head and explain to me that, "There has to be a pound's worth of gold, however microscopic, in the vaults of the Bank of England, for every pound note printed and issued." I do not think there is anyone who believes that today. Why on earth should there be gold? It is more to the point that there should be a dollar bill in someone's pocket for every dollar's worth of wheat in the granaries, or of gasoline in the pumps or of "Jacob's Creek" in the casks!
If people are without bread or wine or gasoline it is plainly because
not enough dollar bills have been issued. However, a myth which still has
its devotees, is that banks only lend their customers' deposits. This in
spite of the fact that no one has ever had a letter from his bank manager,
or knows of anyone who has had such a letter, explaining apologetically
that the thousand dollars he thought he had in his deposit account is not
immediately available to him since it has been loaned to someone else, who
will not repay it for several months! If people can now smile at such
notions, it is because almost a century ago, C.H. Douglas revealed to a
disbelieving world the simple truth that Banks create money out of
nothing. Further, the banks require that this money be repaid to them with
Douglas' discovery was not entirely original. Others had seen that there was something wrong with the money system. Thomas Attwood, founder of "The Birmingham Political Union" and leader of the Midland Chartists, traced the depression of trade to a flaw in the monetary system, the correction of which would, he maintained, achieve all that the "Great Charter" demanded.
Douglas' ideas had their roots in the work of William Cobbett, John
Ruskin and his "Guild of St. George," William Morris and his "Arts and
Crafts Movement," Hilaire Belloc, (author of "The Servile State")
and the Distributist League, but most of all in The New Age, edited
by A. R. Orage and Arthur Penty, the journal of the Guild Socialist
Movement. It was in the pages of The New Age, that Douglas' ideas
were first presented to the public.
What was unique in Douglas' "glimpse of reality," were the solutions he proposed. Debt is really a measure of increased productivity. This increased productivity is Social, and it ought not to be a debit against society, but a Credit, to be shared by everyone through a birthright income or Dividend, and by Discounted prices. It was not Douglas' analysis of the monetary system which aroused opposition so much as his proposal that the new money to balance the new productivity should be created, debt and interest free, to provide a private income for everyone. Such a proposal, if put into effect, would bring to an end the Banking system's Monopoly of Credit, together with all the power and privilege of those who control it!
The Establishment's reaction, in the words of John Masefield in "The Everlasting Mercy," was, "Better a brutal, starving nation than men with thoughts above their station." What, then, of Douglas and Social Credit today?
It might have been thought by those who wish to maintain the monopoly of credit and economic power, that, like Ruskin and Morris, they had safely relegated Douglas to the pages of history. However all around us there is a renewed interest in the question of Debt, and particularly of the unrepayable debt of the Third World. "How is it," ask the people who flock to protest marches and demonstrations against degradation of the environment, poverty and waste of natural resources, "that the Debt not only can never be repaid, but keeps on growing, in spite of the fact that the original loan has been repaid, in interest, over and over again?" The answer to these questions can be found in the pages of Douglas for those who are serious enough about their protests to study them.
In the past few years three heavyweight books have been published by academic authors. The first was "The Political Economy of Social Credit and Guild Socialism," by Frances Hutchinson and Brian Burkitt, (Routledge, London, 1997.) The second, and perhaps more thorough, was "The Grip of Death - A Study of Modern Money, Debt Slavery and Destructive Economics" by Michael Rowbotham, (Jon Carpenter, Charlbury, 1998) and the third, which treats exclusively of Distributism, was "Jobs of Our Own: Building a Stakeholder Society: Alternative to the Market and the State," by Race Matthews (Pluto Press, Australia, 1999.)
Matthews rightly gives pride of place to Orage and Penty and their journal, "The New Age", but I find it all but incredible that he totally ignores the monetary theories of Douglas, first published in that paper and described as "Social Credit," by Orage. It seems to me to be axiomatic that widely distributed property cannot be achieved, let alone maintained, within a monopoly of credit creation. It usually takes at least a generation, and often longer, for the avant garde ideas of a genius to be understood and accepted by the general mass of people, to become part of the mental landscape.
The recent publication of these three books, together with articles and papers in a range of journals, shows that a wider awareness of Douglas' thinking is happening now. This short paper on Douglas, will, it is hoped, serve as an introduction to his "glimpse of reality," for all those who are now, for the first time, hearing his name and the intriguing words, "Social Credit," and will help to convince them that Social Credit is the Idea Whose Time has Come." Anthony Cooney, Liverpool. A.D.2002.
Employment, Debt, and 'The End of Man'
Did you find in the latest Elections, as in most previous Elections, Unemployment was a major issue between the Parties. Each had different plans for reducing it, but no party dared to face the full implications of the technological revolution which has so multiplied the productivity of labour that the routine work of producing all the goods and services which people can possibly need or reasonably want can never again require the full-time labour of the whole, able-bodied population. In other words, un-employment has come to stay, and ought to be welcomed as a liberation from unnecessary routine labour, far better done by machines which have no lives to waste, rather than punished by reduction to a legally enforced penury.
The other matter which is always a major issue at all elections, and in fact in all politics, is money - its provision and expenditure. Here again, no party has dared to face the full implications of the monetary revolution which has substituted a purely symbolic loan-credit, created by book-entries and repayable with interest, for a solid metal coinage of intrinsic value. These questions go too deep to be answered at the level of current politics and economics, which are mainly concerned with coping from day to day, or year to year, with the failure to face these fundamental changes in human society.
They go down to the purpose, to the End of Man, in a word, to
Too many Christians have evaded the duty of seeking a true answer to these questions by pleading a lack of expertise in politics and economics, as if purpose were a technical matter; as if, when they are being driven in a car, the direction were a matter solely for skilled drivers and motor mechanics! No one calls a person who is not employed, but has private means, or a pension, 'unemployed'. It is dependence upon a job for a living, while lacking one, which characterises 'unemployment'. Financial independence transforms it into leisure; the freedom to choose how and for what purposes to employ one's time and energies, whether or not one is paid for them.
As long ago as the 1930's many people realised that, for the first time in human history, that freedom of choice could he available to all, in real economic terms. The limitations were then, as now, purely monetary. According to virtually all professional economists and experts on finance, those monetary limitations are absolute. Our whole civilisation was created and is controlled by credit-finance which is accepted as the immutable reality upon which all else is contingent. For many, perhaps most, people also, money is the ruling reality, as it is for the whole of our industry and commerce, aided now by the computer. As a result, our economy is now almost completely 'supply-led', rather than 'demand-led. It over-rides everything else, including quality, honesty, mercy, economy, common sense, and, on occasion, even sanity.
The extent to which people's lives, and the earth's ample, but limited, resources, are wasted for purely monetary reasons is seen to be quite staggering, when one comes to look into it. As a single example, the full implications of 'the junk mail' are worth following through. Ah! but it keeps people employed. Is that what men and women were born for?
What then is this 'money' which we worship as reality with our lives?
It is a wholly artificial system of numerical symbols, created out of
nothing by book-entries by certain men who have a monopoly, as a 'credit',
repayable with interest which has now reached usurious rates. To the rest
of us - the borrowers - its name is 'debt', and the whole principle on
which our society is based is that of the mortgage: ''Take now, pay
Both of these are words meaning 'faith'; very much the business of the Church, and of all Christians. In what, or whom, then should we have faith? In the eternal God and His Creation, which includes the enjoyment and stewardship of this generous, but limited planet, or in the immutable reality of usurious debt and its creators? For Christians there should surely be only one answer; but surprisingly many of them unwittingly reveal their deep faith in the primary reality of money when they insist that, with enormous resources of human ability and materials being wasted or unused, the poor are poor because the rich are rich and even because the comfortable are comfortable, so social justice requires that the latter be taxed to relieve the former.
There is, indeed, a scandal here in imposed and unnecessary poverty, but it is not primarily the scandal of wealth or comfort but the scandal of monetary control. Wealth and comfort have their responsibility towards the poor: it is the duty of giving. But taxation is not giving, but taking under threat of penalties. There is no love or merit in it either for the givers or the takers. It dries up good impulses on both sides.
Many of us might well benefit from a simpler life with fewer and more lasting goods and gadgets and unnecessary comforts: and it is urgent that this Earth's ample, but limited, resources be no longer squandered on unnecessary, wasteful or destructive activities undertaken to give people wages. But, as things are at present, with debt-money controlling rather than reflecting and enabling economic reality, to cut these down would merely add to the penurious unemployed. Surely there is something very wrong when people may not live simpler lives without impoverishing others! These matters have been long discussed and written about ever since the 'poverty-in-plenty' days of the 1930's, when it first became clear that poverty in a technologically advanced society was a monetary phenomenon, not based on our productive reality.
The solution which was put forward by the engineer C. H. Douglas, and widely supported by many Christians including T. S. Eliot, Canon V. A. Demant and the Chandos Group, was that of the social, or national, dividend, paid equally to all without conditions, the amount being calculated to enable them to meet current prices collectively without incurring debt. This was to be combined with an anti-inflationary price discount in fact a VAT, in reverse - an unprecedented use of money to lower instead of to raise prices.
All this was, naturally condemned and ridiculed by all the recognised experts on debt-controlled economics, since it was a direct challenge to their (unacknowledged) faith (or 'confidence') in the eternal and immutable nature of loan-credit finance. It would be practicable only by means of what to them, would be unthinkable arid impossible, an issue of debt-free money to counteract debt.
A temporary solution however was found along orthodox financial lines in World War II which provided destructive forces capable of coping with our productive powers, with 'jobs for all'. It is now very clear that the destruction necessary to provide 'jobs for all' with nuclear power and computerised automation, will also destroy what we call our civilisation: while the endless 'economic growth' and bureaucracy demanded by 'employmentism' financed by debt and taxation is doing it more slowly. Is this, then, to be our chosen End of Man?
Is it not time that we Christians recovered our courage, and instead of following the secular world, gave our own lead in accordance with our faith in God's not Man's reality and our belief that there is redemption for debt, even on so universal a scale?
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