THE PRIME MINISTER AND THE BANKS.

Dominion, Volume 2, Issue 511, 19 May 1909, Page 6

THE PRIME MINISTER AND THE BANKS.

'.."';'''-- '■ ..'* -- The correspondence which'has flowed in to our columns and to those of the press generally as a result of the Prime. Minister's reference in his Irivercargill speech to what ho calls, the "underbanked" condition of this country bears testimony to the interest that is taken in the subject. Most of those, however, who have ..written in comment: upon Sib Joseph Ward'b statements have ignored what is really the main point in the matter.' It may be -as well to reprint from the speech the passage which set the discussion on foot. Bin Joseph had been giving his explanation of the financial stringency, and he' went on: Some people have blamed tho banks, but upon examination into the position I do not think thore is anything to warrant this, that is .speaking generally. 1 know-nothing of individual cases/ nor am I speaking in that senso. But tho fact remains that as tho result of the change of policy which became necessary by these institutions a considerable amount of inconvenience undeniably occurred to maoy people in good positions. With the growth, of, business, with tho increase of settlement, and with the largo' areas of fresh land being taken- up throughout the Dominion, the banking resources at present in Now Zealand are not sufficient for tho amount of business that requires to be carried 'on in this country. In other words wo aro."underbanked," and either those institutions carrying on this important branch of tho work of the ; country should ' largely: increase tJbeir capital and available funds, or else facilities should be given for an increase in the'number of banking, institutions so as to .keop pace with.the expansion of business that has gone on, and will continue to go on throughout tho Dominion.• ■'■ Many people have concluded from these observations that it is entirely impossible, in the present state of the law, that any bank other than the five already doing business can operate here. Challenged on the point, .they have quoted the Prime Minister as their authority. The impression, in fact, has got abroad' that Sir Joseph was "shaking, a stick" at the five banks, and threatening them with com.petition unless they mend their ways and provide more money for the public to borrow. There is no authority for tho statement, or the suggestion, that. only the Bank of New Zealand, the Union Bank of Australia, the National Bank of New Zealand, the Bank of New South Wales, and the Bank of Australasia can do business in this country.. A new local bank, it is true, cannot commence operations, but it is open to any bank in the Empire working under an existing charter to commence operations if it chooses to do so. Nor is there anything substantial in the way of any such bank issuing notes in New Zealand, although thcro arc formalities ; td be attondod to on this point. The Prime Minister ' must • bo aware of this, and his statements at Invorcargill can therefore be interpreted only as being meant for public consumption. When he talks of granting "facilities for an increase in the number of banking institutions," tho Prime Minister, if ho means anything, can mean only that he intends to remove the barrier in tho way. of now locate banks, In that case

he would not increase by one penny the real capital available for investment. All the local capital that is available for investment has amplo facilities for investment as matters stand at present. It is all very well to talk of asking new banks to come here, but will they come when asked 1 "I can call spirits from the vasty deep," said Glendowee. "Ay," was Hotspce's very practical reply, "but will they, come when you calif' As a Sydney contemporary observes, "the only possible reason that can be assigned why the Commercial of Australia, Commercial of Sydney, the two Royals (of Melbourne and Brisbane), the Colonial, National, and Victoria, of Melbourne, the Adelaide, the Westralian, the two Tasmanian banks, and some of the smaller institutions don't open offices in Maoriland is that they don't think tho business would pay." The present is not a time at which a careful bank would come to New Zealand to build up a business. ' If' Sib Joseph Ward really thinks he can attract now banks to. this country, he must hava spme special inducement to offer them, since some special inducement would bo required to bring them in. What can that inducement be 1 .