THE BANKING ISSUE.

Poverty Bay Herald, Volume LII, Issue 17132, 7 September 1926, Page 9

THE BANKING ISSUE.

(To tlio Editor of the Horn Id.)

Sir, —It ir, ploasing to note that the farmers of this district, and I believe throughout New Zealand, are fed up with platitudes and determined to bo no longer brushed aside, as something of no account in the scheme of things. Vve ai'c told that the present depression will last another ten years. How many of our farmers can afford to indulge, the present banking system to that extent? I’rofessor Murphy arrived, sounded his note of pessimism regarding fanners’ finance,; gave a. lecture that no doubt lie had given hundreds of times to firstyear students; cracked his little, jokes, and left after telling us that our whole, system, of -exchange had evolved into a system of hook entries. He did 1 not bother to fell us that a third party kept i those hooks and that by a strange irony of circumstances became the dictator, and the act mil provider, the producer, became-the mere, drudge without .sufficient intelligence to perceive the way out; hut the farmers are awakening to the, fact that it. would he more profitable to eliminate the third party and demand I hat the State keep their accounts, as it and they are ultimately responsible for. any deliciency. If the State had kept the books during the last 30 years, it is just possible that the former may have been able to appreciate the. award of Jaime by at least fdeedUm fitoin taxation, as taxation is merely the manner of adjusting that deficiency and liroof nf insufficient profit from trading. The present system of exchange is beyond our means, as if eats >up Hie whole of the profit of New Zealand’s enterprise and lands us farther in debt., year by year. A State Bank eon Id hardly do worse. Economies declare and designate- a system of management, and ; surely boom and slumps, hysteria and ■depression 'proves bad management somewhere. A State Bank could employ expert accountants and' it belittles 'us all to say they would not work well and | honestly. 11 could hold our gold values ■ quiescent and could stabilise values-fo a great extent, bv defeating speculation, both in our land and goods.. It could incorporate, with a plan of amortisation. This is impossible to private banking, despite the Bank of NW Zealand’s

offer to use the ridiculous sum of . five millions for this purpose. If would of course be inadequate, but it would be inoperative as it could only he. extended to those who didn’t need it. We speak glibly of short, and long-dated loans, but no banker could afford to become entangled with individual losses. He needs must become a partner in a commercial transaction, .in . loss as well as profit, if liis funds arc held under long date. Short, dales give him his profit and power to place the. onus of loss on others shoulders. ' The whole fabric of private banking depends .upon immedi ate eon version, which proves a. friend indeed, but. an enemy in need when our ability to convert for the moment fails us. Long-dated loans spell a practical moratorium, which the Bank of New Zealand directorate has told us means tlm harnessing and stagnation of funds, loans and finance generally. Amortisation calls for allied and common interest, in a State Bank. It is altogether outside the realm of private hanking. The, advance to settlers is too conservative and applies more particularly to virgin country. AJI exchange principles could be pooled if the transactions were completed'by a State Bank, and the producer would not he called upon to pay ad verso exchange rates on the whole of his production or export, hut only upon the balance over imports. Money changing is more profitable than the growing or reproduction of the money-making factor, and a partnership should ho entered into, per medium of a State Bank. The, sale of debentures as advocated bv the Thu ml Credits Commission, would afford a basis of solvency for it, that, would enaide it. to at, once become felt, in our financial life, and enable it to hold over until better times much of the farmers’ liability lo short dates \Vo all know' tjliat (winverfitbility must he evident, otherwise wo must pay dearly, but this is precisely what we are suffering from to day; an over-short- currency, that, can only he attributed f» bad judgment on the paj-t of private, bankers. A State Bank could do no worse than this th'it has.lauded,9o per rent, of. our pfodujt-ers. on the verge-of hankri'ptcv.r'—T nip, e(e.. JAS. faORJUSON. •