STATE BANK OPPOSED.

New Zealand Herald, Volume LXVI, Issue 20333, 14 August 1929, Page 13

STATE BANK OPPOSED.

PRIME MINISTER DEFINITE,

CHARGE OF CHANGING VIEWS NEW ZEALAND INSTITUTION. MORE STATE CONTROL URGED. [bt telxgk.vfh.—special eetokteh.] WELLINGTON'. Tuesday. "I am convinced wc cannot have a State bank side by side with tlio Bank of New Zealand," said tho Prime Minister, Sir Joseph Ward, in the House of Representatives this afternoon, when speaking on a motion by Mr. F. Langstone. (Labour — Waimarino) to introduce the Bank of New Zealand Amendment BilL Tho main object of the measure, in the words of its sponsor, is "to try to get the power back into the hands of the State, where it formerly rested."

Jlr. Langstono said that while tho Government appointed four directors and the auditor to tho bauk, the Government .had no voico in tho control of the bank. Mr. Langstono said ho had a two-fold reason for introducing tho bill. Firstly, ho believed there was no more urgent question confronting tho people of New Zealand than that of banking, and ho thought that if a committee were set up to bring down something of a tangißle nature, a big step would be taken toward solving the problems of unemployment, industrial dislocation and commercial stagnation. When Slate Helped Bank.

la tbo second place, lio desired to throw the light of public opinion on the Bank oi New Zealand with a view to determining whether the bank was conducting its a flairs iu the best interests oi tbo people of New Zealand, and particularly with regard io tho help th* bank had received in tho past from the State. The bank had bad no compunction in 1394 in asking for financial assistance from tho State, with the result that £5,251,090 had been given by the Government oi tho day, of which Sir Joseph Ward was then Colonial Treasurer, io help the bank out of its difficulties. According to Mr. Langstone, tho bank was noWshowing a base ingratitude by biting tie hand that had fed it.

In the past the management and control of the bank had been taken out of the hands of the shareholders by the action of Sir Joseph Ward in appointing four representatives of tho Government on the directorate. Although the four directors were still appointed, their powers were nil, and the bill had the object of trying to put the power back into the hands of the State, where it formerly rested. An amendment of the Act in 1920 had taken ail real power out of the hands of the Government appointees. Functions of the Bank.

"Their positions are now mere sine- j cures," ill". Langstone said. "They draw | the emoluments of office, and that is all there is to it. I thought it my duty to introduce this bill to give bacii to 111® Government of the day the powers it should rightly have. It is a pity the bankwas not made a State institution in 109-f. A wonderful chancs was lost, but the next best thing was done by running lanK in a bind of co-partnership. We should see that the bank functions in the interests of the people and not merely m the interests of the shareholders. The Prime ilinister said ihat when the countrv came to the assistance of the Bank of New Zealand the institution was in admitted difficulties. If the course suggested bv Mr. Langstone had been followed it could have only been done by putting the bank into liquidation and j locking up the assets of the individuals The question of a State bank had been i thoroughly considered at the time. Mr. Langstone: You could have bought it for a sons; you could have taken it over as a going concern. Value ol Aid Given. The Prime Minister said _ it could not have been done without disaster being causer 1 to a considerable number of people, it would not have been possible to take the bank over at that time. The rescuing of the bank from its financial embarrassment put Xew Zealand anead many years. • Mr. Langstone: It put tho shareholders ahead, too. The Prime Minister said the shareholders would have lost every fraction had the Government not come banks assistance. The bank to-day had a majority of Government nominees on the directorate, and the auditor was a Government appointee. Mr. Langstone: They have got no power. The Prime Minister: They have. Tho hank carries on the business of the country —an enormous business—and it does the business well. The Bank of New Zea- | land is an institution that deserves tho , respect of people who have nothing to do j with it. Assistance to Country. ''When I took charge of the finances of this countrv' in December last the bank ] offered its assistance to me in connection , with the finding of money tor State ad- ] varices to settlers and for other purposes \ if required." said Sir Joseph. "Fort■in- j atelv, I did not need to avail myself of the "offer, but at the same time the bank ' was ready to come to the assistance of j the country in an emergency had one existed. "To talk about changing the Bank of New Zealand into a State bank is to talk of what, in inv judgment, is not possible. The responsibilities of the shareholders have to be recognised. To acquire tho institution would mean paying them m full for their interest, and that might be more than the country could anord. The Bank of New Zealand at present, is a semi-State bank: it is as near to a State bank as is possible. "Leave Well Alone." "In regard to a State bank, I think we should leave well alone. At one time in mv public life I was favourable toward a State bank, but since the Government has become entwined with the Bank of New Zealand I an?, of opinion that the country cannot have a State bank side by side with the. Bank of New Zealand. It seems to me the only course open to New Zealand in its relations with the bank is not to interfere with it in its private business capacity. Let tho directors and the manager carry on without any Government pressure. If I were approached to make representations in my official capacity in rejrard to an account I would resent it. Each year the Minister of Finance receives an analysis of tho audited published balance-sheet of the bank, a confidential document giving full particulars of the operations. ••Mr. Langstone is wrong in thinking there can be any interference on the part of the Government. Looking at it from the broad view. I regard the Bank of NewZealand as i great national institution. It pavs heavv taxation and it has_ a larce amount of Government money invested. It is a very powerful and a very successful institution." Labour members challenged Sir Joseph Ward to deny that during the election campaigns he had advocated the establishment of a State bank. "What confidence can we have in such a rapid, such a kaleidoscopic change of front on the part of tho United Party?" asked Mr. P, Fraser (Labour— Wellington Central). "The more this session proceeds, and the more the policy or lack of policy of the United Party is shown, the more are we getting into 'a state of bewilderment as to what it all means." The bill was read a first time, the second reading being set down for August 23*