A STATE BANK.

Otago Witness, Issue 3936, 20 August 1929, Page 26

A STATE BANK.

OPPOSED BY GOVERNMENT. LABOUR’S AMENDING BILL. WELLINGTON. August 13. A definite indication that the Government would not consider the establishment of a State Bank was given by the Prime Minister (Sir Joseph Ward) in the House of Representatives to-day This provoked a gibe from the Labour benches that the Prime Minister’s changes of front were becoming so kaleidoscopic as to leave the House in a state of bewilderment as to what it all meant. The subject arose on the introduction of the Bank of New Zealand Amendment Bill by the Labour member for Waimarino (Mr F. Langstone), who had explained that the object of the Bill was to restore to the Government powers which rightly belonged to it. The Prime Minister said that when the country came to the assistance of the Bank of New Zealand the institution was in admitted difficulties. If the course suggested by Mr Langstone had been followed the acquisition could only have been done by putting the bank into liquidation and locking up the assets of individuals. Mr Langstone: Y'ou could have bought it for a song. You could have taken it over as a going concern. The Prime Minister said it could not have been done without disaster being caused to a considerable number of people. It would not have been possible to take the bank over. The rescuing of the bank from its financial embarrassment had put New Zealand ahead. Mr Langstone: It put the shareholders ahead, too. i The Prime Minister said the shareholders would have lost every fraction had the Government not come to the bank’s 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. The" bank carries on the business of the country, an enormous business, and it does the -business well. The Bank of New Zealand is an institution that deserves the respect of~ people who have nothing to do with it. When I took charge of the finances of this country in December last the bank offered its assistance to me in connection with the finding of money for State advances to settlers. Fortunately, I did not need to avail myself of the offer, but at the same time the bank was ready to come to the assistance ot 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 my good judgment, is not possible. The responsibilities of the shareholders have to be recognised. To acquire the institution would moan paying them in full for their interest, and that might be more than the country could afford. The Bank of New Zealand at present is a semi-State bank. - It is as near, to a State bank as it is possible to have. “ In regard to the question of a State bank, I think we should leave well alone. At one time in my public life I was favourable towards a State bank, but since the Government has become entwined with the Bank of New Zealand I am of opinion that the country cannot have a State bank alongside the Bank of New Zealand. Although Mr Langstone has quoted cases of individual hardship, it seems to me that 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 the directors and the manager carry on without any Government pressure. Each year the Minister of Finance receives an analysis of the audited, published balance sheet oi the bank, a confidential document giving full details of its operations. “ Looking at it from a broad point of view,” added Sir Joseph Ward, “ I re-

gard the Bank of New Zealand as a great national institution. It pays heavy taxation, and it has a large amount of Government money invested. It is a very powerful and a very successful institution.”

Mr M. J. Savage (Auckland West) challenged Sir Joseph Ward to deny that during election campaigns he had advocated the establishment of a State bank “ 1 listened with amazement to the Prime Minister’s statement,” said Mr I’ Fraser (Wellington Central). Mr Fraser said that if his memory served him, the Prime Minister, in 1920, during the Tauranga by-election campaign, had advocated the organisation of the credit of New Zea land by means of a State bank. That advocacy was made long after the Seddon Government had come to the rescue of the Bank of New Zealand. “ What confidence can we have in such rapid, such kaleidoscopic, changing of front on the part of the Prime Minister?” demanded Mr Fraser. “ The more this session proceeds and the more the policy, or lack of policy, of the United Party is produced, the mote are we getting into a state of bewilderment as to what it all means. The question of a State bank is not to be dismissed in such fashion.”. The Bill was read a first time, the second reading being set down for August 28.