CHEAPER MONEY?

Thames Star, Volume LXII, Issue 17414, 31 August 1928, Page 4

CHEAPER MONEY?

EFFECT OF NEW BANK.

SUGGESTION IN THE HOUSE.

FINANCE MINISTER’S SUPPORT.

'«V Telegraph—Press Association., WELLINGTON. Aug. 31. The report of the committee on the London and New Zealand Bank, Ltd., Bill was considered in the House yesterday aftefluoon. .

in moving the adoption o| the report Mr. J. G. Eliott (Oroua) said he desired to make it clear that the bill was not promoted simply to give a “rake off” to those men who were piomoting tho hill. Those behind the movement to establish a new hank were men of independent moans. The hill had come hack with the approval of the Select Committee and experts who had given etidciue before that committee. A< Million to Start With.

Tho nominal eapitai was now fixed at £3,000,000 and the hank would not open its door for business until £1.000,000 was in the hands of the hank. The promoters’ fees had been limited so that at best they would, receive 312 fully paid-up shares in tho bank. No shares were to he issued at discount, hut at par. Speculation on the part of promoters in their shares was fairly well guarded against. Other Banks Agreeable. Mr. Eliott said the chairman of the Associated Banks had given evidence that his association had no objection to the new hank, although they considered the present hanking facilities were sufficient. The chairman also, said any attempt on the part of the new bank to cut rates would lead to war and would result, in the existing banks putting the new bank out of business. The evidence of other financial authorities supported the establishment of another hank. Dominion Trade Increase

The argument that if an increase of £28.750.000 in the trade of the Dominion in 21 years justified the establishment of a new bank in 1913, it was logical that a further increase of £65,500,000 in 13 years warranted an extension of the hanking facilities of the country was used hv Mr. Eliott.

Finance Minister’s View.

’The Minister of Finance, Hon. \V. DoVnie Stewart, said when first approached on the subject he had said he saw no objection to the new hank being started. The trade figures quoted by Mr. Eliott must he regarded with caution, because they were to suno extent the figures of years of inflation. Dividends of the banks, also, were not quite a safe guide, because, these were partly due to interest derived from reserves,' which all hanks must have, and were not due entirely to earnings on the working capital of the banks.

Support for Bill.

The suggestion to start a State Bank in New Zealand should be approached with caution, because from all lie could see. hear and gather banking was not going to be as popular in the near future as it was now. Referring to competition, the Minister said he culv wished companies which were doing a class of hanking business gave him as little trouble as the banks did. He could only say he would support the Bill.

Labour’s Idea

The Leader of the Opposition, Mr. H. E. Holland, said he would like to know, whether the new bank would lend iiknev to settlers at a lower rate of interest than the Associated Banks and what tlie new bank would do to meet the offensive which the chairman of the Associated Banks was said to have threatened against it. A million of c apital would not carry it very far and ho wanted to know jiow long it was thought this capital would carry the bank on. Cut Rates Predicted. Mr. J. .Mason (Napier) said he did not tliink the statement of policy toward the new bank made by the chairman of the Associated Banks was a threat, but be meant that if the new bank began to cut rates the other banks must do likewise as a business proposition, and the weakest bank must go to the wall. Tiie report was agreed to.