BANKING.

Press, Volume XLIV, Issue 19391, 17 August 1928, Page 10

BANKING.

AGRICULTURAL AND STATE. FEAR OF PARTY INTERFERENCE. [TBS PRESS Special Berrloe.] WELLINGTON, August 16. The question of a State bank and the amount of influence whicb the representatives of the Government on the directorate of the Bank of New Zealand should exert in determining tne policy of the bank, and the establishment of an agricultural bank were subgets which were dealt with in cogent fashion by the Minister for Lands (Mr A. D. McLeod), in the House of Representatives to-night. ~,„,„« n „ m . "I have had a great deal of sympathy with the idea of a State bank, tbe Minister said. "1 have examined the ideas and suggestions on the subject and blbo the effect of the operation of such an institution, as it is exemplified in the working of the Commonwealth Bank of Australia. If theie is one thing that makes me scared or venturing into the establishment or a State bank it is the sentiment expressed in the idea that the representatives of the Government on the directorate of the Bank of New Zealand should have used their influence toJorce tne bank to change its policy from time to time. The temptation to use that influence is so great that it has been and always will be the weak link m a State bank." , , .... .. . ■ Mr McLeod said that political interference by the Executive of the day was one of the first things the Commonwealth Bank had to overcome, and it had not been operating for very long before very definite laws were passed defining the powers of the governor and officers controlling the bank, ana making the bank safe from interference by the Government of the d«y. A State bank was not worth one minute's consideration unless such provisions were included in its constitution. The Commonwealth Bank had done a certain amount of good, but whatever changes were made in its administration were made by the authority ol the people's representatives in Parliament, and the Executive in power could not influence its operations one iota. The suggestion that the Government should take a certain line of action with' its representatives on the Bank of New Zealand indicated to the Minister what the Opposition would do if it came into power, "A great deal has also been said concerning an agricultural bank, especially by the member for Wanganui, Mr Veitch, to whom the term agricultural bank is like the blessed word Mesopotamia," continued the Minister, "but there has not been a suggestion as to what an agricultural bank really is," Mr Veitch: Nonsense.

"The term agricultural bank has been mouthed from «one end of the country to the other by opponents of the .Government, and it has been implied that the Government is standing in the road of the creation of such a bank," proceeded the Minister; Mr Veitch: Hear, hear. "No such thing," rejoined Mr McLeod. "No member of Parliament has suggested what an agricultural bank should be." Mr Veitch: A Bill has "been introduced.

Mr McLeod: Yes, with a State guarantee. I contend that the State Advances Department id an agricultural bank, but if anyone suggests an agricultural bank of issue then I do .not know of one. Mr Veitch has talked of an agricultural bank with a State guarantee, but why call it an agricultural bank?" Such a bank could not confine itself to agriculture.

Mr McLeod also discounted criticism of the Government for jiot having competed for deposit money with the banks. Mr J. A. Lee (Auckland East):. You should have held what you had. Mr McLeod: "We would have been holding up money that was not being used. The country Was crying out for long term mortgage money." He recalled the difficult period experienced by Australia in the late 'eighties and *'nineties, when competition by the banks for the deposit money available led to payment of interest up to 10 per cent, for twelve months. If last year the money had been worth the fight, I the Government might have fought for it, but placed where it was the great bulk of it was useless. That was not I merely the opinion of the Government, j but it was the opinion of the responsible officers of the Treasury.*