THE STATE BANK

Evening Post, Volume LXXXIX, Issue 7, 9 January 1915, Page 7

THE STATE BANK

TEST OF WAR AUSTRALIA'S EXPERIENCE. In tne course of a general interview, with Mr. Fisher, the Prime Minister of the Commonwealth, reference was made by a representative of The Post to the Commonwealth Bank. For \hi& institu-i' tion Mr. Fisher modestly disclaimed paternity. "It was my party which, originated it," ho corrected. Be that as it may it was realised that banks were generally safe and usually very profitable concerns for their shareholders. Mr. Fisher or hia party or both asked themselves why. the 1 Commonwealth doing a tremendous amount of business with the banks, Of should not do it* own banking and the> State itself go into the business. Banks start with a fairly iatge capital and derive their profits from lending out that* capital ; they also make a profit on lending motley at higher rates than they pay for money lent to themselves, and> profits, again, on money which is deposited with them for safekeeping and general convenience, upon which they pay no interest at all. These elementary facts impressed themselves upon the originators of Uh> Commonwealth Bank, and 6O a federated 'Australia ventured into banking, with, Mr. Tisher hoWs, unqualified success. "It has," he said, " justified itself • from the very start., but never more so than ia the recent cri.im brought about, by tbe war It has been most helpful in many ways. H has given to the public all the facilities and asswtanco that a private bank would give, and it, was founded entiroly wftJuottt capital; although the Authorised capital is £10.000,00 ft. It is a significant fac *- that the Commonwealth. Bank was one of tbe vnry ftew banks that paid out gold in London during vhe war crisis, and it has done so »J1 the time*; and besides it has given^ astSstanco to Australians who had credits in other banks. " li will do greater service to the country generally in the future than it. has already done. Its management is conducted on precisely the same linea

management by a governor, in the person of Mr. Denison Miller, has proved wholly successful. "Tho note issue is our great sheet anchor. It has enabled us to furnish all the States (Queensland excepted) with funds, obviating borrowing, to the extent of £18,000,000, plus £10,000,000 in gold against notes, lent by the Australian banks under an arrangement by which the States engaged not to borrow for a period of twelve months, except for renewals of existing loans falling due. The £10,000,000 in gold advanced by the banks is to be repaid by the Commonwealth at the close of the war. This arrangement — the advance to the States of £18,000,000— enabled them to go on with developmental works. The earnings from the note issue will be abonij half a million this year — which is exceptional. In an ordinary year the earnings would be about a quarter of a million. ' ' The hostile criticism of the Commonwealth Bank scheme as a scheme is lessening day by day and is reaching its vanishing point. The people see it at work, realise its profitable, advantageous character, and it has proved of inestimable value at the present time — a time of stress and anxiety for the world at large that was not contemplated when the Commonwealth Bank began its career."