The Lyttelton Times. TUESDAY, MARCH 5, 1895. STATE CONTROL OF THE CURRENCY.

Lyttelton Times, Volume XCIII, Issue 10597, 5 March 1895, Page 4

The Lyttelton Times. TUESDAY, MARCH 5, 1895. STATE CONTROL OF THE CURRENCY.

Theee ia little room to cavil at the resolutions of the open-air meeting held on Saturday evening in Cathedral Square on the subject of a State Bank for Hew Zealand. The requests that a Eoyal Commission should ba appointed to inquire into the subject, and that depositors should be granted the right to operate by cheque on their accounts in the Post Office Savings Bank, are perfectly legitimate demands, to which no reasonable person can take exception. There are, however, several facts and considerations which may have escaped the notice of the promoters of the meeting. In the first place, we think they overrate the importance of Royal Commissions, as means of furthering any desired reform. More frequently, these inquiries are simply the grave of agitation. A State Bank Commission sat in Sydney some two or three years ago, took a mass of interesting evidence, and presented a highly-favourable report; but the people of New South Wales are much further from possessing a State bank than are the people of Hew Zealand. Then we are not sure that a State bank would come near realising the sanguine anticipations of those enthusiasists who advocate it. Probably, the introduction of bi-metallism, which a speaker at the meeting of Saturday evening decried as “ a more palliative,” would do more good to Hew Zealand at present than the inauguration of State banking. The great fall in the prices of our staple products, from which every one in the colony suffers, would not be arrested by the starting of a State bank or by any possible reform in our domestic currency; but if the projected International Monetary Conference were to resolve upon the remonetisation of silver there would, no doubt, be an immediate rise in prices. We do not contend that bi-metallism is scientific in its basis, or that it would be radical in its operation. It is a mere palliative, but a palliative that would produce satisfactory results ought not to be dismissed in favour of a system which ia still on the visionary plane, so far aa Hew Zealand is concerned.

In favour of the State undertaking the business of issuing the medium of exchange, and controlling it for the good of the community, there are many weighty authorities quoted, and valuable precedents relied upon. Mr Gladstone and Lord Sherbrooke, among English statesmen, have pronounced in favour of the Government issuing and controlling the “domestic currency ” in the shape of paper notes to take the place of those issued by private banking firms and corporations. Against the arguments based upon the depreciation of French “assignats” and American “greenbacks ” may be placed the undoubted prosperity and stability of Euasia today under a State issue of paper roubles, and the fact that the people of the United States were never so prosperous as they were from 1861 to 1879, when State paper money was almost the only medium of exchange in the country. The weakness of the State bank case lies in the demand for an inconvertible paper issue. What the New Zealand advocates of State banking ask for was very tersely set forth a few days ago by Mr W. Sievwright in a public lecture given under the auspices of the Gisborne Knights of Labour. That gentleman summarised his conclusions as follows;—■ 1. That the State in this country should be authorised to issue, and should have the entire control and regulation of, a domestic currency declared to be legal tender for payment of debts and taxes in New Zealand. 2. That ouch currency should be a paper one of 10s notes and upwards, based on and issued to colonists against specific security of real property, and other property of a tangible and identifiable kind to an amount not exceeding one-half value. 3. That one State bank should be formed to carry out those objects. It should be non-political; its officers responsible directly to Parliament; subject to strict audit by the Audit Department; should lead the currency on overdraft operative accounts, to be drawn out and paid in as required; interest to be charged at 5 per cent on daily debtor balance; and no interest to be allowed on credit balance. 4. Bank to carry on such new business usually done by private banks as may be found useful to the community, or necessary.

To demand all thie at once, or to expect to obtain it by the agency of a J&oyal Commission, is tantamount to crying for the moon. Party politics, as at present developed amongst us, would have to be abolished before a State bank could be expected to keep its doors open for a single week. That is an absolutely indispensable preliminary. With existing standards of patriotic feeling and political ethics, either “party” in the State would think nothing of creating a financial panic if thereby the Government in power might be turned out of office. The tactics of the present Opposition certainly justify that presumption. Let the management of the State bank be made strictly non-political as possible, the Opposition would still make wild allegations whenever any fresh issue of notes took place, which would have a perpetual disturbing tendency. The operation of the Government Advances to Settlers Act will, to a large extent, supply the place of a State bank, by providing those requiring it with money at low rates of interest. We may well await the result of making advances on tho security of real estate before extending the system to all kinds of securities. The important thing is that the principle is estab-, lished, and that it will automatically extend its operation until advances will be mad© on all kinds of plant, merchandise and producers well as on

personal property; Fesiina lente is $ safe motto when dealing with matters of this kind. The request that Post Office Savings Bank depositors should be allowed to withdraw money by means of cheques is such a moderate one that we hope the Government will see its way to comply with it. The introduction of the system might entail extra work and expense, but if the * public desire the change, they have a right to have their wishes respected.