STATE NOTE ISSUE.

New Zealand Herald, Volume XLVIII, Issue 14809, 12 October 1911, Page 8

STATE NOTE ISSUE.

WILL THE BANKS BUY?

CHANGE HOUSES MAY BE

NEEDED.

COST OF THE SCHEME.

Authorities on banking matters in Auckland regard the Government's proposal to issue bank-notes with little favour. It will be, a difficult, scheme in many ways, they say.

One authority, interviewed, said that if such notes were to be issued provision should be made to change them, not in Wellington alone, but in all the centres, and especially in Auckland, where by far the largest volume of business was done in New Zealand. To have the single establishment in Wellington would prove very inconvenient, as the banks, according to details now published, are to be given no inducement to change the notes. The scheme, lie was certain, would have no effect on the banks.

An ex-bank manager said he wondered how the Government were to get the notes issued. The banks were to get nothing for issuing them, and if they wanted them they would have to give sovereigns to the Government?for them. They were to get no premium—nothing. It was absurd. - The State notes were not to be legal tender to the Government for debts, though they could be given as such to any common person. What would people run after State notes for under such conditions ? Many people objected to notes of any kind as things were. Perhaps it would be better for the Government to issue gold. There was another point, and it was in regard to cost. At present banks paid three per cent, for the right to issue notes. It also cost them one-half per cent, to maintain the issue. Then there was the rule that 25 per cent, of what was issued had to be in gold, ready in case of demand. Interest had to be paid on that money, and to borrow that money cost four per cent., which, spread over a whole million, would be one per cent. There was a total cost to issue a million of per cent. Perhaps the Government would say- that the cost to them would be only I 3 per cent. Directly that would be so, but the issue of banknotes was to be stopped gradually, and from t hat three per cent, would be "lost to the Government.

STATE BANK SUGGESTED. A PROPOSED INQUIRY. [BY TELECBAPH.—SPECIAL CORRESPONDENT.] Wellington, Wednesday. Notice has been given by Mr. Arnold, M.P., of a proposal that "the House of Representatives should appoint a committee to inquire into the question of the expediency of establishing a State bank for the Dominion, the committee to have power to confer with any similar committee appointed by the Legislative Council. Mr. Arnold suggests that the members of the committee should be Messrs. Arnold, Ell, Fraser, Ha nan, Hogan, Laurenson, Mander, Millar, Myers, and Rhodes. .' :■" ~. " ' 1 ■ ■