THE STATE NOTE ISSUE.

New Zealand Herald, Volume XL, Issue 12238, 6 April 1903, Page 6

THE STATE NOTE ISSUE.

VIEWS OF REPRESENTATIVE BANKERS. THE QUEENSLAND EXPERIENCE. [BY TELEGRAPH.OWN CORRESPONDENT.] Wellington, Saturday. Inquiries were made by a Post representative to-day among representative banking authorities in Wellington, on the subject of the Premier's speech so far as it referred to the State note issue and Bank of New Zealand. With regard to the issue of notes by the State the general impression appears to be that the banks now doing business in the colony would not regard such a step with absolute disfavour. At present the banks' issue costs them about 3 per cent., besides, bringing into the Treasury a revenue of about £28,000 a year. The system has been in force in Queensland for some time, but it is understood that the Government of that colony does not regard it as an unmixed blessing. When it was first started in Queensland it was provided that the banks taking the State notes should pay 25 per cent, in cash, the balance remaining at interest. Several banks, however, preferred to pay the whole amount at once, thus depriving the Government of the regular revenue from interest, which had been anti cipated, and burdening the Government with the amount which had been paid for the notes. Eventually some of this amount was deposited with the bank, but the general result was that the issue of notes by the State resulted in a loss. The probabilities are that if the same system, was in vogue in New Zealand, a number of the banks would pay the whole amount at once, the same as was done in Queensland. It must be remembered, too, that it will be necessary to set up a department to supervise the issue of the notes. This will, in itself, entail a considerable amount of expense, whereas, at present the Government draws about £28,000 a year from the banks for their note issue, without any expense whatever. As to the Partnership with the Bank of New Zealand," it is considered possible that the Government will take up hi shares a portion of the £2,000,000 which it now guarantees to the institution, and will thus gain a direct control and interest in the bank. The opinion of the banking world in Wellington appears to bo generally against the establishment of a State bank proper, and that there would be a danger of political influence being exercised in a way which would not conduce to* the public confidence in the institution.