The Gisborne Times PUBLISHED DAILY. SATURDAY, AUGUST 1, 1925. MR COATES SIDE-STEPS CLEVERLY.

Gisborne Times, Volume LXIII, Issue 10065, 1 August 1925, Page 4

The Gisborne Times PUBLISHED DAILY. SATURDAY, AUGUST 1, 1925. MR COATES SIDE-STEPS CLEVERLY.

lit would, seem that, at last, light has been shed on the intentions of the Coates Government as to how it intends to handle the thorny problem which arises on account of the discontent amongst the producers over the difficulty in securing sufficient monetary accommodation at what they regard' as a fair coet and under what they reckon suitable terms of repayment. No secret it is, of course, that this important question worried the Massey Government not a little. On his part, the latt. Mr Massey sympathised deeply with the producers in their predicament, hut he was not prepared to bring in legislation aiming at the establishment of a etraightout State- Bank or at assisting an Agricultural Bank with a heavy State guarantee. We believe that Mr Massey was afraid that if his Government embarked on the first-mentioned proposition it would mean that a serious, difficulty would arise with the trading banks of this Dominion and that, it the alternative suggestion were adopted, it would amount to undue favoritism towards one particular class and that an Agricultural Bank would prove a serious menace to the State Advances Department if it succeeded and-- a very costly experiment if it failed. To put the matter plainly, Mr Massey found himself in a fix. But his successor, Sir Coates, now has to grapple with this awkward problem and, seemingly, his plan of action is to have the question shelved until after the General Elections. What he proposes is that experts should he sent abroad to study the operations of Agricultural Banks in older countries in which it is claimed, by supporters of the scheme they have been, and continue to he, a great success. He has, indeed, invited Mr Poison, the president of the New Zealand Farmers’ Union, and the “father” of the scheme in this Dominion, to make one of the proposed delegation. It would seem, in the •cumstances, that that gentleman nnot raise any serious objection to e suggested enquiry, even if he is able personally to make the trip, le fact of the matter is that the ectors as a whole are entitled to arn all that can ho said in favor the scheme and all about any obtions to it before the State agrees place any guarantee at the back it. If, then, Mr Coates’s proposal

ould prove acceptable, it will serve to disarm supporters of the principle of an Agricultural Bank for the present session and for the General Election campaign. But, orf the other hand, the putting forward of a plan for an enquiry into the working of the system overseas is not likely to silence advocates in respect of a State Bank. The position in this regard is so clear that it is not open to misconstruction. In short, the State Bank advocates claim that, although the State has a very considerable holding in the Bank of New Zealand, that institution carries out the policy of what is known as the Associated Banks and makes no special concessions in favor of its clients. To put the matter in another way, they say that, as far as its clients are concerned, it might just as well be wholly in the hands of its private shareholders. They would seem to overlook this fact, however, that, if the Bank of New Zealand were not in the field, bank charges might, possibly, be still higher than are being experienced. It would also appear that they do not appreciate the fact that if a straightout State Bank were established, the State would require either to purchase the Bank of New Zealand or create a separate institution which would have to compete against that institution as well as against other trading banks. In any such trial of strength, it would probably be found that the private banks would restrict their business only to the safest forms of investments, and a: State Bank might not be able to offer better terms for that class of business. The result, unquestionably, would be that a State Bank would be left.to deal with the less attractive demfkids for monetary help and if its business carried a larger proportion of heavier risks its charges could not be made lighter than are being charged to-day. Such being the position, we do not believe that a straight-out State Bank is likely to be established in this Dominion in the immediate future. Whether or not the Coates Government will be able to exercise stronger control in connection with the affairs of the Bank of New Zealand is quite another matter. In the meantime, it will be of interest to await what the Agricultural Bank advocates have to say in regard to the proposal that the operations of the system abroad should be investigated. We shall not he surprised if the upshot is that it will be agreed that much of the difficulty that at present confronts the producer might he removed if the Government were to extend very considerably the scope of the business of. the State Advances Department.