SECOND EDITION. A STATE BANK

Poverty Bay Herald, Volume LII, Issue 17130, 4 September 1926, Page 6

SECOND EDITION. A STATE BANK

SUPPORTED BY FARMERS COUNTRY'S GRAVE POSITION There was :in attendance of '2C> people, mostly farmers, at the public mooting called tliis morning' to discuss the question of Slate bunking and rural credits. Alter the matter had been discussed at length a motion in favor of a Sraie bank was passed.

Mr. I'. S. .Bowen, who was elector! to the chai". said that (he meeting was called for the purpose of trying to improve the present condition of the fanning industry from the financial viewpoint. So thai the mooting would luivo something to speak to ho would move: "That this public mooting of farmers and business men are distinct ]y opposed in the limit, of E7UOO proposed in the present rural credit scheme. That the limit, if any, should be not less than £20,000; thatWe approve the making of the Bank of Now Zealand an absolute State institution, which shall be at the back, or else have full control of any proposals for •finance; that we approve of the system adopted in Uruguay whose population, industries, area, and conditions are in tunny ways similar to those of New Zealand. " The system that suited Denmark, he said, might' not suit Now Zoahuid and they were opposed to the Bill as it stood at present. The Commission had not reported on the Australian State Bank, but they all knew .that it was one of the most successful in the world. (iermnuy and America had both come to the conclusion that an amalgamation of banking interests was needed.

What :i lice tod the country in Now Zealand affected the town, and they, had 1o face the position. A State bank, to be successful, had to be for town and country alike. Ja 1914 they had £ 19,000,000 in the savings bank, and to-day they had £49,000,000, but all the liquid assets the Government hail to meet that totalled £2,000,000. Money was too dear and until they could reduce the cost of money to the fanning community they 'could not reduce tlic cost of production. He had sold for a little over 9d a lb, wool that had cost hi.n I ltd to produce. A reduction of one per cent, in the banking charges would save the producers £BOO,OOO a year. THE PIECE' OE LAND Mr. Francis Stafford, in seconding iho motion, said that they had been pleased with some of the tilings which had hhen found out by the Commission.- A day or two ago they had Professor Murphy in Gisborne and. ho wanted to join issue with him. If banks could declare dividends of I I per cent, and still have internal reserves and undisclosed profits he wanted to know why land should go down in price. The Commission had recommended a limit of £7OOO advance to farmers, but what use would that trilling amount be to some of the farmers in dhe room. The Commonwealth Bank had started with a deposit oi £IO,OOO and had worked that up 1< many millions. On two occasions the Government, had saved the Bank id Now Zealand and they had allowed the bank to pile up enormous profits. Main good farmers had gone down, am 'many more wore to go if things remained as at present. Protcssoi Murphy had said that you could not make capital out of nothing but if lie (Mr. Stafford-) could toll some oJ those in the room what he really knew about 1 kings, it. would open their eyes If they did not get these things In (volution they would get them In revoluiion. The time was coinin': when the worm would turn, and tin farming community was the worm. Mt; 0. E. Bickford said that fron a party point of view he might lx biassed, but lie wanted to show then the value of a State bank. They' hat in Now Zealand ft national debt ol £200,000,000 which was about tlx highest in the world, and they had ti try and find some means of liquidatin' that debt which was carrying million.of interest. He liked the motioi which was before the meeting, but. I did not. go as far as he would like it. to Vi'hv should they take over the Bunt of New Zealand at a huge cost, whet they could start a bank of their own They had the lesson of Australia t< show them what could be done in tliii respect. They could only do this pro vided they were loyal—ami that was i weakness’iu this country. The ship ping and banking combines of tlx world were combined to' squeeze tlx profits out of the primary producers The re was ;i way out but they wouli have to be loyal’io their own institu tion. DASHED TO THE GROUND. The banks, said Mr. Bickford, .onlj lent the farmers- tire money of tlx people—it wasn't the shareholders monev, for there wasn't enough oj' it Ho would' strongly -object to then purchasing (lie Bank of New Zyalnm when there was no necessity to do so. Mr. .I. O. Field said that the hopes of the farmers for the future had bed dashed'to the ground. It was-grow ing more difficult to Jinnuec every day. They had to get cheaper nioney nud more money. To the man wlu was sheopfarming to-day, the £7xot limit was no good. He was the man I w ho was bearing the burden ol taxation. They were, goingvto ask then legal brethren to reduce their costs too. (Applause), Mr. E. T. Buniurd was asked ti speak’. He said that he recognised the necessity for something being dom- U improve’ the position into which tlx country had gut. There was such a direct ’community of interest between iown and country that the support ol business men was assured. I lx-\ had to liml out wlmt were the actual ml,vantages to be derived from a Stale 45ank." He had not learnt wlmt they were that morning'. He could not see how cheap money could be got: merely b v starting n State bank. Capital was a liquid thing that (lowed all over the world. If tlx 1 State bank gave conlidcncc capital would come to New Zealand and the interest rate would drop. They would create a different form of institution and a certain amount of money would be attracted into it. The money did not come ft- outside, but came from I he on filings of the people in the count i,\. The institutions had to pay such a rule thul thov could attract money. If |ho stale bank money was to be lent mu at less interest it would have i.o pn v less interest. As far as lie could see the Commonwealth Bank had done no good for the producers, although it had undoubtedly been a success. It was a success merely because .it did business on the same lines las other banks. They would have to look deeper and not, be disillusioned by names. He felt, tliat the greatness of the Empire and New Zealand had not

been built up by State control but by a policy of self-reliance. He was sorry; lo have observed that the remarks of one or two of the speakers had produced an echo from a member of the Labor Party which seemed to show the principles which, were held by Mr. Bickford', who held, quite honestly, certain views. It seemed to him that the whole of the principles of Mr Bickford 's party were destructive, and not in the interests of the fanners. Tile references to the members of Cabinet who held shares in in.suranco companies was wholly uncalled for. It was ;i mere accident that the members of the Cabinet held bank or insurance shares, and Air. Bickford's attack was most regrettable. .Mr. .Stafford (heatedly): Mr. Bickford didn't attack them. Dr. Ross: Yes he did and he should have been shoved out of the meeting. Mr. P. ,T. Roberts: Of course he did and we just listened to him. Mr. Burnard, in conclusion, hoped that some solution would be found of the dill'iculties which the country was facing to-day. Mr. ('. 11. Bridge said thai he could no; support the resolution because there were so .many dill'iculties in the way. Until they', had furl her information he did not think an important district like Poverty Bay should rashly come to a decision. A CATCH SOMEWHERE. Mr. C. A. Smith said that he was satisfied' there was a. catch somewhere in our present banking system. In a lime when everyone was losing money it did not seem' right that the banks should be making big profits. The Government Insurance Office had dono well in New Zealand, and so had the Public Trust. The,present banking system was only the book-keeping by whic.h tin' nations' business was conducted. They had to guarantee the banks in. times of stress and, therefore, he thought there was something ,in a State bank. He did not think as yet Ihav.the meeting should favor a Stale bank. Fanners should get credit on the most advantageous terms. (-'heap rates of interest were not lo be had to-day, and it was idonbtful whether New Zealand could -succeed in leading the world in this ■respect. Mr. But'iiard had been right in what, he had said regarding capital. Ho considered that instead of spending £(i()00 in gel ting the Commissi out's report they could have got all' their findings from previous reports. Jt seem- ,.,[ |o him that the Commission 's recommendations were (tiffing ttithi the matter, but ho was not prepared' to snv I hat State banking was the solution.

Mr. H. 11, Wall said that he did not think Hint they could get cheaper money for many years lo come. He did ilol think a State bank or any other bank could' lend them money at less than ti per cent. Dr.' Ross said that years ago lending money on land was the-bes! investment.' Why was it that no one would lend money lo farmers now.' There was something wrong somewhere, and people did not have confidence in the farmers., The farmers were, putting ridiculous values on their hind, and people would not lend money on it until the laud values were reduced. Mr. Stafford said [hat Mr. Bumard had asked where the cheap money was coining from. One bank had paid 221 per con I. one year, and by a gift of shares had made 07J per cent. Mr. Bickford was absolutely sound in his deduction regarding the State bank.

Mr. Bowen said that thoy talked of laud values being too high, but without the land, bank shares would bo valueless. The trouble was that produce prices were low and money prices were high. Unless something was done a bit;' section of the community was f>'oiug under. The motion was carried on the voices.