STATE BANKING.

Northern Advocate, 6 February 1929, Page 3

STATE BANKING.

(To the Editor.)

Sir, —I was pleased to read Mr W. H. Chctham's letter upon the above subject, as the more in this field the better, but, though myself an ardent advocate of a State Bank—on sound lines—l still think that it would be an excellent thing, before a State Bank is actually established in this Dominion, if we could have a great deal more discussion upon the principles, or philosophy, of sound bankI ing in its relation to the production of wealth. For just so far as the national banking system facilitates, by the proper manipulation of the nation's credit, the production and distribution of wealth, it is sound, and just so far as it retards the production of wealth and the employment of labour, is it unsound. People talk about “a State Bank" like they might talk of having a child, hardly considering that the child when born might have powers to enable it to live to sway the destinies of the world, perhaps for all time, like Christ, Mahomet, Plato, Aristotle, etc., or on the other hand it might die in infancy or at most live a life of little value to anyone, or even cause positive injury to many. So it is with a State Bank. Whether this, if established, is to be a great boon to the Dominion or otherwise, will depend entirely upon its constitution and the way in which it is managed.

In my letter on "A State Bank for N.Z." which you did me the honour of publishing in the "Advocate" of 9th. of January, I outlined some entirely new features, which are the outcome of some 40 years of independent investigation of the whole banking question, and are not to be found in the writings of any other writer or authority on economics. Apparently no one noticed these innovations or considered them wortfi. discussing, yet, if adopted, they would really revolutionise our whole productive and banking system.

This reminds me of a little story that came to notice -some years ago. A representative of the Government Life Insurance Department called during the dinner hour at a factory in Auckland. There was a man on a soap-box holding forth upon prohibition. The insurance agent broached his business to a man near by. "Oh," said the man, "we have one of your sort here already." "Where?" asked tho insurance agent. The man pointed to him who was holding forth on prohibition. "But" contended the agent, " that man is only trying to win converts to prohibition. Life insurance is an entirely different matter." "It's all the same” replied the worker, "you've all got the gift of,the gab."

Herbert Spencer says: "The test of intelligence is the capacity for differentiation," so I am afraid this man's intelligence was of a rather low order. But the same law holds good ever higher in the human scale of intelligence, which is exemplified by the saying—by whom originated I know not —"The nearer we are to truth, the tho more liable we are to err," Which is quite true, as the wisest men fall linto errors, and the deeper they dive into philosophy the more they learn that is open to doubt; so that while Socrates was acclaimed the wisest man in Athens, he said of himself that ho knew nothing, and if he were the wisest man in Athens, it was only because he knew that he knew nothing, but others did not even know that they knew nothing. With regard to the principles of sound finance, there seems still much

difference of opinion upon certain points among eminent thinkers and waiters upon economics. It seems most ’important that the truth should be evolved out of these various convictions; in fact, this is essential before we can establish a really sound system of finance, the full discussion of which really carries us ' beyond actual banking. Since the daily newspapers are more concerned with supplying their readers with full details of uew's, sport, and crime than with anything iu tho nature of philosophy, it seems to mo that what is needed is a monthly publication devoted entirely to the discussion of banking and economic questions generally. lam engaged in ,t. .little correspondence with Mr G. Bernard Shaw with regard to the true basis of a stable currency, I do not yet know if I shall succeed in making that greater writer see eye to eye with me, I am, etc., C. P. W. LONGDILL.