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A STATE BANK., Issue 8027, 2 October 1889
A STATE BANK.
A short and easy way of raising money has much the same attraction for quite a. number of people that treacle has for flics, and usually with similar results, “ Thank God ! that’s settled,” was the pious ejaculation of Mr Micawber when he signed a promissory note; and the Micawber family are numerous. Hence it is that the notion of starting a State bank is periodically brought on the tapis. Of course it is the old story of “ a bale of paper and a printing press” in a slightly altered form. What could be more easy—in theory ” The State has only to print its notes and render them a legal tender by Act of Parliament and—presto!—the thing is done. No, not quite done; for Mr Verb all, the eccentric member for Ashley, proposes that the Government should take—“convey the wise it call”—all moneys “lying at call” in the banks, paying the same interest thereon as is now paid for foreign loans. We question whether the owners of the deposits would be quite satisfied with this pleasant little arrangement; but we shall probably be reminded the public good is a supreme law to which private interests must give way. But this is not the end of Mr Verkall’s resources. The Government is to collect the taxes in gold, and to have the right of issuing notes and “receiving gold in exchange for them.” This is rather foggy. Is the tax collector to refuse State bank notes in payment of his demands? And in what way can the State compel the exchange of gold for notes if people prefer to keep the gold, even if only for the payment of taxes? Bat Mr Verrall apparently aims at the State monopolising all the gold in the country. Even the miners' gold is to be taken “in exchange for bank credit.” It is not proposed in so many words that the miner should be compelled to make the exchange; and, advantageous as a State bank credit may be, we rather incline to the opinion that he would continue to sell his gold in the highest market. This, however, it is assumed by the advocates of a State bank, would be created by such an institution ; for we find Mr Sedcon' asserting that “if a State bank were “established it would have the goldfields “ for its operation, and the miners would get “an increased price for their gold.” The other advantages, as set forth by the member for Ashley, are absolutely overwhelming. By the beneficent operation of the bank the State would, he tells us, be enabled to pay off the whole of the public debt, to stop borrowing, to dispense with the Property Tax, to build the Midland, the Otago Central, and other railways ; “ and not only would it do this,” he cries, “ but it would “ develop the agricultural, pastoral, and “ mining industries by bringing about lower “ rates of interest.” It is strange that such glorious prospects should attract so few admirers. Mr Verrall complains that no answer has been made to his arguments in favor of his pet scheme, and boldly assumes therefrom that “no answer can be made,” But we fail to find any argument in his speeches. Of assertion there is more than sufficient; but of argument, none at all. We are assured that a State bank will produce very grand results, but there is no explanation of the modus operandi—ol how these results are to be effected. The very motion upon which his declamatory speeches are based is of the vague, vaguest. “In the opinion of this “ House it is desirable that a State bank “ should be appointed.” A matter fraught with such importance cannot be settled by an accidental debate on the floor of the House. It is necessary to take evidence, to study financial statistics, and to figure out a complete scheme for the consideration of Parliament. And no attempt to do anything of the kind has been made. However, we must be guarded in oar criticisms, for when the Christchurch ‘Press’ ventured to suggest that even if we lived in the golden sunshine of a State bank we should still have to pay our foreign debts in bullion, the member for Ashley, charged the editor of that paper with ignorance and wilful misrepresentation of the facts. “Of course,” said he, very magnanimously, “ we cannot blame the newspapers, “ because they are simply obliged to do as “ they are told—to write to the orders of “the money-lending companies and the “ shareholders of the companies that own “the papers.” We think the charges of ignorance and misrepresentation of facts may fairly be retorted upon Mr Verrall. And as to the point in dispute, if he thinks the New Zealand Parliament can compel foreign bondholders to take State bank notes in payment of either principal or interest, he must be suffering badly from hopeless mental paralysis. Now it so happens that a similar project —the establishment of a State bank—has been exercising the mind of the Sonth Australian Parliament, and a Royal Commission to inquire into and report upon the subject was appointed. That Commission has recently so reported, and their report is the exact converse of the motion submitted by Mr Verrall.
The question remitted to the Commission was—“ Whether, in the interests of the “general community, it is desirable that ‘ ‘ arrangements should at once be made “for the establishment of a Government “bank for the province of South “Australia.” And the answer is decisive. The Commission reported that it was “unable to recommend the adoption of “the proposition that a Government “bank should at once be established.” Such an issue might have been expected by all who are even slightly acquainted with the financial and economical questions involved. As a recent writer very truly says: “The State Bank disorder is a feverish “ eruption, which is best left to * come out * “of the patient in a natural manner. It is “ hardly surprising that in self-made com- “ munities, wherein force of character — “apart from the equipments of education and experience—plays so con- “ spicuous, and, on the whole, so worthy “ a part, a strong desire is constantly being “manifested to search into the rudiments of “a question in a manner which is occasionally calculated to tax the forbearance ‘‘ of those who have advanced further. But “ the agitations connected with the idea of “ a State bank which have been carried on “ in various colonies havehitherto practically “ ended by common sense vindicating itself, “ as the untenability of the views held by “the advocates of the system has been “ gradually demonstrated.”
A STATE BANK., Issue 8027, 2 October 1889
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