A STATE BANK?

Hawera Star, Volume XLVI, 17 June 1927, Page 6

A STATE BANK?

EFFECT ON DOMINION’S FINANCES. COMMONWEALTH BANK’S GROWTH. STATEMENT BY ACTING-CHAIR- . MAN OF BANK OF N.Z. SPECIAL TO THE STAR. WELLINGTON, June 17. “It is argued that a- State Bank would meet all our monetary trials,” said Mr. R. W. Gibbs, acting-chairman of the Bank of New Zealand, in addressing shareholders at the annual meeting this morning. “Well-, there is a State Bank in the Commonwealth, and for the guidance of those who desire to know what effect the establishment of a State Bank would be likely to have on finance in this Dominion, a reference to the operations of the bank mentioned may prove interesting. “The Commonwealth Bank commenced operations in 1913. At that time the advances of the joint stock banks in Australia totalled £124,229,109. At December 31 last they bad increased to £247,548,616, an increase of over £123,000,000. During the same period the advances of the Commonwealth Bank grew only to £13,010,671. “If a State Bank is the panacea for the financial ills of the why sne-h solid preference given to the joint stock banks by the public generally, as these figures indicate, notwithstanding that the joint stock banks in Australia for some years have charged a higher rate of interest to the public than the Commonwealth Bank? The figures quoted prove that a State Bank is not an important factor in fixing the rates of interest, and the preference shown is due to the fact that the joint stock banks can give a better service than any State Bank can possibly give. “The Commonwealth Bank for some years charged a uniform overdraft rate of 6 per cent to the public, but in response to the law of supply and demand it increased its rate for general overdrafts from 6J per cent to 7 per cetn as from January 1, 1925, and reduced it to 6V per cent fiix months later. For years, during that bank’s existence our rate for best accounts was 5.J per cent, despite, the fact that, while we paid the' Dominion’s exchequer hundreds of thousands in taxation, the Commonwealth Bank was entirely immune.

“The growth of the capital ('amassed solely from profits) of the Commonwealth Bank is frequentlv cited in favour of establishing a State Bank. A speech delivered by the Federal Treasurer. Dr. Earle Rage, on June 13, 1924, is illuminating as to the way the Commonwealth Bank amassed its large profits. Dr. Page quoted the balances as at .Tune 30 which the Commonwealth Government kent with the Commonwealth Bank as follows: Average. For 8 years—l9lo to 1923 £13,390,000 For 5 vears of this period —l9lO to 1920 £17,035,200

“On one occasion the balances amounted to £40,000,000. On all these immense sums, said Dr. Page, the Commonwealth Bank paid not one penny of interest to the Government. Onr institution gets no plums of that sort from the New Zealand Treasury. . “When the New Zealand Government receives from us to-morrow the dividend on its shares ill the' Bank, it. will have received/ in all for the year: Income Tax £100,418 Land Tax 17,370 Note Tax 119,930 License 200 £297,918 Dividend £232,128 Total £530,046