A STATE BANK.

Taranaki Herald, Volume LXVIII, Issue 16798, 23 July 1920, Page 3

A STATE BANK.

PREMIER NDT IN FAVOUR. BANK OF NEW ZEALAND EQUIVALENT. Per Press 'Association. WELLINGTON, July 22. In the House of Representatives thik afternoon, Mr. Veltch (Wanganui) moved the second reading of the dominion State Bank Bill, which, he said, was framed with the idea of establishing a State Bank simliar to the Commonwealth State Bank. Such an institution, with its own bank notes, would not debase currency, as was genially suggested, while it would be of infinite benefit to local bodies and to the State generally. The amount of interest which would bo s&vod would mor6 than compensate for the amount of taxation now received from private bailks. It was proposed to empower the Treasury to advance to the bank £500,000 to give it working capital. In Australia it was intended to transfer to the Oommonwealtb Bank £1,000,000, but it wasnever necessary to transfer any money, which, he claimed, was a most satisfactory position. Loans were raised for Australia cheaper by the State Bank than they could have been raised in London, be 1 - ing £2 4a 6d against £2 7e 6d per cent. War loans had been raised cheaply in New Zealand, but he doubted if more cheaply than in Australia. He quoted figures to show the business done by the Commonwealth ißank. The last balance-sheet showed'that the accumulated profits amounted to £2,363,500. Banking was a safe and profitable business, and the saving in interest alone would justify the State entering upon it. State competition was necessary to check tfie enormous profits now being made by private banks. Mr. W. D. Lysnar approved or the principle of the Bill to tide the country over times of crisis. As a means to this end the Post Office Savings Bank might be converted into a State Bank. Mr. Massey said that the Bill was an appropriation Bill, and he could have stopped the mover if he pleased, but be thought the subject was one which might bo discussed. _He had no wish to say one word against the Commonwealth Bank, but he wished to point out that there was this difference between the banks, namely, there was no partnership between the Australian banks and the State when the State Bank was started, but there is a partnership between the State and the Bank of New Zealand. We were the junior partners certainly, but we got a great deal of money out of,the Bank of New Zealand in one way or other. We got £343,501 last year and ; as there would be further banking legislation this session, he believed that in the near future we would be getting a great deal more. In dealing with the Bank of New Zealand they had never made unfair demands upon the State and he considered we had raised our loan? as cheaply as other countries. To him the position was this: We were partners in the Bank of New’Zealand and we could not start another institution doing the same business and competing with it without hurting that bank most seriously. The existing arrangement was an excellent one and he was not disposed to interfere with it. The Savings Bank was a most satisfactory institution and was most helpful to the Government in its finance, but we could * not turn it into a commercial bank. If we started a State-owned bank we would to a great be placing the banking of the country in one man’s hands and he didl not think; the people would stand such a position as that. The position of bullion in the banks was most satisfactory .and showed that the banks were thoroughly sound. So far as the country Was concerned, we, had a good investment in the Bank of New Zealand and he had pleasure in saying that the Government had never asked that institution for any service that had not been freely extended to it.

The Hon. J. A. Ha-nan favoured starting a bank and thought it might be done by combining the Post Office Savings Banks and the Advances to Settlers Department. The Hon. C. J. Parr strongly supported a State Bank. The credit of any nation was the power of that country to produce real commodities, and every nation should control its own credit. A State Bank would give a permanent guarantee to farmers and to the bulk of the industrial section of our community. The Bill was read the second time.