Reserve Bank of Australia Annual Report – 1965 Special Functions and Activities

Note Issue Department

Notes in circulation increased by £3 million in 1964/65 after a decline of £2 million the previous year.

During the year the installation was completed of new equipment for the printing of Australian decimal currency notes and production commenced. Initially they will be issued in denominations equivalent to existing notes — i.e. $1, $2, $10 and $20 — and will be similar in basic colour to the notes they are replacing. Adequate supplies of the new notes will be on hand to meet requirements from the changeover date, 14th February, 1966.

The change to decimal currency presented an opportunity to design completely new notes and with the Government's approval work was begun in 1963. A panel of seven leading designers was set up under the Chairmanship of Mr. Alistair Morrison with Mr. Russell Drysdale representing the Bank as Artistic Adviser and Professor A.D. Trendall of the Australian National University assisting in some of the deliberations.

Three members of the panel, Messrs. Morrison, Douglas Annand and Hal Missingham, acted in a consultative and advisory capacity and the other four, Messrs. Gordon Andrews, Richard Beck, Max Forbes and George Hamori, were each engaged to design a set of four notes, each series having a unity of style. While each designer was responsible for the design of his own series in competition with the others, there was throughout a spirit of collaboration, criticism and appraisal from all members of the panel as a working team. The designs of Mr. Gordon Andrews were selected.

The Bank's Note Printing Branch at Fitzroy prints about one million notes and five million postage stamps and other items every working day. The following figures show that output again increased in the year under review:

Rural Credits Department

Rural Credits Department advances covering seasonal finance for processing and marketing primary produce reached a peak of £161 million in March, 1965; the previous year's peak, also in March, was £127 million. Demand for accommodation was heavier following increases in production levels generally, particularly a record wheat crop of 370 million bushels. There was also a marked increase in the tonnage of butter available for export.

During the year, finance was again provided for a variety of other commodities, including canned and dried fruits, sugar, barley, oats, cotton, almonds, peanuts, superphosphate, copra, eggs and dairy produce.

Aggregate outstanding advances of £121 million at 30th June were £56 million higher than in 1964. Accommodation required to support a higher level of wheat stocks and increased outstandings for terms sales to China and India constituted a significant portion of this increase. Substantially more finance was also needed for dairy produce and canned fruits.

The Rural Credits Development Fund, established in 1925, is credited each year with half the net profits arising from the operations of the Rural Credits Department. These funds are distributed for the promotion of primary production in Australia, and many organisations concerned with agricultural research and extension activities benefit. During 1964/65, grants amounting to £260,000 were distributed to universities, research groups, agricultural societies and young farmer organisations. The projects supported included a biophysical investigation of plant nutrient absorption, a study of the fundamental biology of grasshoppers, the purchase of an electron microscope for use in the field of parasitology, and a biochemical study of nitrogen fixation.

Bonds and Stock

Inscribed Stock Registries are conducted at all branches of the Bank.

Through the year Registries continued to issue, on tap, Treasury notes and Special Bonds, and to receive conventional loan applications and advance subscriptions. As in the previous year, four Commonwealth cash loans were floated, the August, 1964 and April, 1965 flotations being combined with conversion operations and the issue of new series of Special Bonds. The number of applications received for conventional cash loans rose substantially, whilst the number of inscribed stock holdings for all types of securities showed a slight increase over the previous year.

In addition to implementing the Government's loan flotation programme and conducting the Inscribed Stock Registries, the Bank provides safe custody facilities for holders of Commonwealth Government securities. Throughout Australia some 71,000 stock holdings and 3,500 safe custody bond holdings are maintained.

July, 1965 marked the fiftieth anniversary of the commencement of loan raising and establishment of Registries by the Bank. In the half-century, Australia's internal public debt managed by the Bank has grown from an initial £13 million raised by the First War Loan to more than £3,500 million.

Exchange Control

Exchange Control policy and procedures continued to be directed essentially towards controlling capital transfers on Australian account. The remittance of funds due to overseas residents was freely allowed regardless of whether the payments were of a capital or current nature.

Buyers in some overseas markets continued to seek extended payment terms from Australian exporters. Approval to ship on the basis of payment later than the normal maximum period of six months after shipment continued to be given where it appeared in Australia's interests.

Banking Services

Customers' accounts

The Bank provides a full range of banking services for the Commonwealth Government, several State Governments and some other governmental bodies. It also conducts accounts for trading banks, savings banks and overseas central banks and financial institutions as well as for primary produce marketing authorities and co-operative associations financed through the Rural Credits Department.

The main volume of banking business arises from the accounts of governments. Since the inception of the Reserve Bank as a separate institution in 1960 the number of debits and credits to customers' accounts has increased by 75 per cent to almost 1 million items a week.

Rural Liaison Service

This Service, which was formed in 1956, has continued its main function as a rural information service to banks. During the year the Service continued to supply its publications to the banks and answered queries by banks on rural questions. In April it arranged a conference at Tamworth between representatives of banks, government departments and universities to discuss changing land use and development in northern New South Wales. Schedules showing land values and associated data have now been supplied to banks for 120 local government areas in New South Wales, 27 in South Australia and all rural areas of Tasmania. These schedules will be revised as circumstances warrant.

Centralised facilities for distribution of cash to banks

Arrangements have been completed for the establishment by the Bank of centralised cash distributing facilities in New South Wales, which will be used by most banks. These facilities, which will enable banks to have cash distributed directly between the Reserve Bank and their branches, will largely replace the existing system under which banks obtain their overall requirements of notes and coin from the Reserve Bank and organise distribution to their branches. Armoured car services for the transportation of notes and coin to and from banks' metropolitan branches are planned to begin in August, 1965 and cash remittance services to country branches will commence in 1966. It is proposed to offer similar facilities in other States at later stages.

Economic Liaison

The Bank again had the benefit of a very useful flow of information and opinion through its direct contact with people engaged in a wide range of activities in both private enterprise and governmental service. It is grateful to all those who so willingly make themselves available for interviewing by liaison officers in all States.

Economic and Financial Research Fund

The Bank continued to support post-graduate research into economic and financial matters having a bearing on the Australian economy. Assistance was provided for projects commenced in previous years and grants were made for several new projects.