A STATE BANK.

Timaru Herald, Volume CXXIII, 13 October 1926, Page 9

A STATE BANK.

; 'ADDRESS BY MR W. NASH. Last evening, under the auspices of the.W.E.A., Mr Walter Nash, Wellington, National Secretary of the New Zealand Labour Party, presented the case for a State Bank in New Zealand. He spoke for an hour and a half on the subject, and then devoted half an hour to answering questions. Mr Nash, who is a fluent and forceful speaker, had his facts well marshalled, and his points with great clarity, so that all who had the pleasure of hearing him were able to learn a good deal from his address..

; Mr Nash said he was a strong advocate of the shedding of light, and it was because he was convinced of the value of a State Bank to New Zealand, that ,he wished to shed some light on this all important question. He claimed that a State Bank Is essential to the welfare of the community and that it could be more efficiently operated than the privately-owned Banks. In New Zealand. he said, the banking system was controlled by the Associated Banks —the. Bank of New Zealand, the Union Bnnk, the Bank of New South Wales, the Bank of Australasia, the Commercial Bank of Australasia, and the National Bank of New Zealand. Those six Banks monopolised the credit power of the Dominion and their power was such that they were able to, and did, control tho productive and distributive system of tbe Dominion. The Associated Banka in conference determined wjiat credit would be Issued, to’whom, and for what purpose, and the rate of interest to be paid. The Associated Banka could restrict overdrafts, thus reducing prices; they could extend credits and thus increase prices, and they had more power over primary production, importation, and prices than either the Legislative, workers, farmers, or merchants. It was essential that the control of credit should be centralised; concentration and monopoly of finance were imperative for safety; and the solvency of the Banks was so essential to the well-being of the Dominion that if a crisis occurred, the Government, in the interests of the people, would be compelled to come to the rescue of the Banks. And as in the ultimate the credit of the whole of the people was behind the Banks, it was logical to argue that the fruits of that credit should return to its source. At the present time title policy of the Banks was determined by tbe amount of profit which could be made for the shareholders.

• Mr Nash went on to say that a comparison between hydro-electric schemes and banking, illustrated the real service which Banks should render to the community. The hydroelectric scheme was the concentration of water at a given spot where it could be controlled, converted into power and re-distributed throughout the Dominion. As the generating station was to water and electrical energy, so was the modern banking system to credit and production. The prime essential of an efficient credit system was that the savings of the people shall flow into the Banks, and through the Banks be re-distributed in the form of credits which, if efficiently organised, would bring new products from our lands, facilitate distribution, eliminate waste, and give the resultant savings to the people who work the land, man the ships, manufacture the essentials of life and organise the necessary distributive facilities. The organisers of the banking system in Great Britain, said the lecturer, realised the value of concentrating the power for effective use, and during the past thirty years the number of banking institutions operating there had beert reduced from 137 in 1893, to 31 in 1920. , . The control exercised by the Associated Banks in New Zealand was occasioning concern to the primary producers, industrial workers, and commercial sections in New Zealand. The control referred to was such a menace that the question of reform was one of urgency, and while he would not claim that a State Bank would give everything that was desired, he did say, after very careful study of the question, that it would be a big improvement on their present banking system. Instead of operating for the benefit of a few shareholders, a State Bank would operate to the benefit of all classes of the community. The first essential of a scientific banking system should be the provision of credit facilities In the interests of all the people. The Commonwealth Bank of Australia was quoted with approval for what, it had done for Australia; and the

speaker said, that this Bank supplied a complete answer to the suggestion that success was impossible undee Government control. Dr. Earlo Page (Federal Treasurer), In 1923 had said “the Commonwealth Bank was the dominating factor in the financial world of Australia.” It had organised the war loans of the Commonweal; it controlled its own note issue; and had made profits totalling £12,000,000 since Its inception. It had shown that successful banking could be accomplished under Government control." Perhaps this Bank was not giving such good service now under management by six directors, as it had given when it had been sympathetically and very ably managed by the late Sir Denison Miller. The dominant member of the Associated Banlcs of New Zealand was the Bank of New Zealand, which was controlled by six directors, four of whom were appointed by the Government. These now determined the banking policy of the Dominion, and their policy was always in the interests of the shareholders and financial corporations of the Dominion. Mr Nash went on to give the history of the Bank of New Zealand, which seemed, something of a romance; and the point wa3 made that it was not until the Bank had the backing of the Government that it reached the high road to prosperity and assumed the character of the strongest money-lending institution in New Zealand. If this could be done with a Bank backed by the State, it could be done to still better advantage with a properly organised and efficiently run State Bank, the- purpose of which would be, not the making of abnormal profits for private shareholders, but the organisation of credit for public service, a stimulus to scientific production and an aid to efficient marketing. The Bank of New Zealand had been founded in 1861, its first balance sheet showing a paid up capital of £108,786. Dividends totalling £2,612,058 were distributed in the 26 years from 1861 to 1887. The dividends ranged from six per cent, in 18 62, to seventeen per cent, the average over the whole period being 14.17 per cent. The average paid up capital over the period was £664,000 and in tho 26 years, the shareholders received all their money back twice over. The slump period and the Banks reconstruction were referred to; the opening of the new era in the history of the Bank; tho return to dividends; and the speaker said that, the profits in the first eleven years of Government control amounted to £2,699,798. The result of Government control was further reflected In the excellent position of the Bank to-day, but a bulk of the profits made had been diverted to the shareholders.

In conclusion Mr' Nash said that the case for a State Bank was that the whole credit of the Dominion must be used to prevent the Bank’s failure, and this being so the benefit from this guarantee should automatically go to the whole of the people and not be used for the benefit of tho shareholders. (Applause.) An interesting discussion followed, the lecturer stating his opinion on all the points raised, in a most informative way. On the motion of Mr John Hardcastle, seconded by Mr A. J. Bridgewater, Mr Nash was accorded a very hearty vote of thanks. Mr R. Stewart (president of the W.E.A.), occupied the chair.