The Grey River Argus MONDAY, April 23, 1945. STATE TRADING BANK.

Grey River Argus, 23 April 1945, Page 4

The Grey River Argus MONDAY, April 23, 1945. STATE TRADING BANK.

Probably the benediction of the/ finance capitalists in the Dornin- j ion is given to the propaganda j against the State acquiring Iho j private interest in the Bank of ■ New Zealand. Already one-third 1 of the shares belong to the State, recalling the fact that only for State aid the bank would have ceased to exist. The propaganda is published by a committee representing shareholders, whose main contention seems to be that the proposal to take over has been a direction to the Government by the whole conference of the Labour Party, and not merely a decision by Cabinet, or, more particularly, the Minister of Finance. Because .Mr Nash had recognised assistance from trading banks during the war period, the shareholders’ committee attempt to make out that he does not favour the State conducting one such bank, but surely he is a more authentic exponent than his critics of his own attitude? It is said primary producers are the largest class with bank overdrafts, hut where wore the primary producers left during the slump? The late Mr Coates said a majority were bankrupt. It was the Government, not the trading banks, which came to their rescue. The public are asked to believe that if one trading bank , becomes State owned, the others ■ will follow. If, however, the one State trading bank were to prove i detrimental, as the critics allege it must, the odds are undoubtedly • that more would not be favoured ; or instituted. On the other hand. : it is no unfair assumption that the private finance capitalists op-, pose even a single venture from : the fear that it will justify itself ; in such a manner that the country will prefer it io other banks. Thus] it is possibly-the whole of the in-' tertsts behind private trading banks which have promoted the , agitation against (iny competition on the part of the State. There is no .intention to create for the State a monopoly of trading bank < business. But the State already provides a very great part of the business of the Bank of New Zealand, which, is one fact that the shareholders’ committee leaves in ( the background. They say that during the war the money supply , has been doubled, and instance as a reason the increase of the national debt from £322 millions to • £S()G millions. The hanks, how- ■ ever, do not deny the necessity of . war expenditure. After the war, . a State trading hank would be calculated to check the danger of deflation. Every Government has an interest in opposing both inflation and deflation. Private ■ banks, on the other hand, are prone to deflate when prices de- , cline, and to inflate when prices increase, which is quite inimical to the public weal. After the war there may be extra necessity for the provision of credit for industry, both primary and secondary, ' but. if the depression years are any guide, the private banks will be more likely to call in their advances than to increase them. It is true enough that the State has been always a careful lender, hut the' private bank propaganda, in quoting this fact, rather discounts its suggestion that once it obtain- ’ ed complete,- instead of partial, control of the Bank of New Zealand. the State would become a < careless creditor, it is not. just a question of the interest of share- ' holders in one bank. The main < consideration is that a State trading bank would make advances primarily in order to promote/ public as distinct from private ad-1 vantage. Its hacking would on-/ able it to go further in promoting'

development by means of loans than by private banhs would go. In actual, fact, the Government over a long period has been a great provider of advances for settlers and home builders. If it had a trading bank, it could similarly assist people in business.