STATE BANK?

Nelson Evening Mail, Volume LVI, 17 June 1922, Page 3

STATE BANK?

NOT NECESSARY IN NEW ZEALAND BANK CHAIRMAN’S VIEWS WELLINGTON, This Day. The subject of a State Bank was dealt with at some length by ..Mr George Elliot, Chairman of Directors, at the annual meeting of the Bank of New Zealand yesterday afternoon. Ho said: — Tho establishment of a State Bank in the Dominion is being in certain quarters, but as the position has not been fairly and fully put to the public, it is desirable that I should say something on the subject. There is only one State Bank in Australasia, and it is. contended that the success which lias been attained by that institution, founded 0 years ago, warrants the foundation of a similar institution in New Zealand. The conditions in the two countries are, howover, entirely different. Oik; third o. the capital of the Bank of New Zealand is owned by the State, and the Governments appoints, a majority m the Board of Directors . the State Bank referred to, which serves a population of more than four times that of New Zealand, has not, during the nine years’ of its existence, made, any contribution to the public revenue whatever, either in the shape ol dividends or taxation. True, it has, ama-s----ed a surplus of £3,792,726, which remains in the business, and is practically its working capital. The Bank ef New Zealand, on the contrary, during the last 9 years, has, exclusive of £375,000 Bonus Shares issued to the Government, contributed to the revenues of this country no, loss a sum. than £2,171,450. The actual amount of cash invested in our Bank by the Government is £875,000 and to this has been adewd Bonus shares, as just moiithmed, tui the reserve lurid, thus giving the Government a capital interest in the Bank of £1,250.000 . , Tho annual dividend paid' to the Government on its capital, in the Bank is now £112,500. The interest payable by the Government on the loans issued' to provide tho capital it has invested in iho .Bank amounts to £o*,r 500, leaving a net annual profit to to tho Government of £BO,OOO. On ao per cent 'basis, this moans that tee goodwill of the Government’s interest in tho Banlc as a going concern is £1,600.000. ' , . Cu , Tho hist balance sheet of the, Stae Bank referred to diows that in its ordinary banking department it heal .£26,000,000 of deposits, whilst its advances to its .customers amounted, to £14,000/100. Tho deposits of our own bank in New Zealand alone, exclusive of those of the Government, at 3Lst March, stood at £*9,500,000, whilst our advances in the Dominion amounted to £21.700,060. No comment need be made as to the relative measure of-support accorded to producers and traders during a particularly stringent period by the State Bank aim hv our Institution. The rate of interest charged to the public overdraft by the State Bank is 6 per cent, whilst 7 per cent is charged hv Banks in this Dominion on tlie same basis as that of the State Bank, as far as rates and v taxes are concerned, the rate tor advances here "on 1-1 be at once reduced. In the Post Office Savings Bank and i tho Advances to settlers Department, the country already h is two organisations that', as a combination, to Ml intents and purposes meet the objects for which alone a State Bank might bo justified. But do taxpayers Veal-

ise what is, lost to the Slate, in income Lax atom'. through Hu; hu-iiu-ss done by those organi'situ-im having _ been diver tod from the ordinary hanks. Taking til.' of the Uo Government Departments at 31sb Marc.i 1921, the extra Income r lax lor Lie year which would hm. e bran pak! by the banks had the husimss been ir> their ’lands, would have amounted to nearly three (iicirtv’s ol a m dial. That'is one of the endiselosecl losses to the State .irffiing from State enterpiises competing with private o-u----ienuises. , , There is little doubt that ihe e« tabhshment ef a State Bank hcie would militate against the growth or deposits in the Post Office Savings Bank, which for many years past have been ' increasing hi a substantially oroatpr ratio than the deposits with the ordinary batik's It may he douo,od if in any British country the hanks liave to face such severe competition from Post Office Savings Banks as do the hanks in this country. In Omit vs n't ail, the Pest Office Savings 1 a: !< holds deposits to the extent of about Cd per head of the pomilahon. ilm rio-ire in this Dominion is He. The British Savings Bank is ready n depositor" for the savings of the pe_iple. To maintain its character m tins respect, it makes no effort to attract into its treasury deposits of a considerable! amount, but restricts its cl” •jositers te lodgments of Pot) m a year, and to a total per depositor < 1 £2OO. The hanks here, having to pay mronio Tax, Land Tax, and rates, as well as other much heavier overhead expenses than the Post Office SavingBank, cannot afford to pay lor short term deposits such rates as the Post Office does. it. is qnostionaole whethei t.ic growth' of deposits in the Post Office Savino-s Bank at Hie expense ol tue ordinary Banks k in urn best interests of the Dominion. Deposits in the hands of the banks are available lor the requirements of prodticeis ant traders, whereas in the -hanos el tee Post Office Savings Bank it means that the Government gets the money’, and as a consequence, raises s ; mm, Jess hv direct loan issue. But lor many years to come, indeed until the •country is much mure fully den eloper! than it is at present, the Government, should raise its loans abroad, as they can do so at lower rates, than ordinary borrowers Local accumulation Mould thou become available lot mortgage purposes, and for investment in industrial and oilier developmental eiitcrin it can undoubtedly be claimed that the experience of the last two years has proved the strength of the hanks and their capacity to handle u critical position M’itli judgment, courage, and (..onsideralion for their customers. The hanking system of this country has been evolved as the result of id years of practical experience of the needs of the people. The fabric of credit is one of the most delicate of organisations and slionld not be lightly "interfered with.