The Wanganui Herald. [PUBLISHED DAILY.] THURSDAY, DECEMBER' 19, 1901. A STATE BANK.

Wanganui Herald, Volume XXXV, Issue 10522, 19 December 1901, Page 2

The Wanganui Herald. [PUBLISHED DAILY.] THURSDAY, DECEMBE R' 19, 1901. A STATE BANK.

At'u political meeting held atDuntdin ori^the 16th inst, a .resolution was carried that, in view of tho growth of the', public debt, both of. the Government and- local bodies, the Government should assume the ' functions of banking^ ~,and that meetings should- be organised to evoke , public interest in the question of "a State Bnnk. ' The resolution" was somewhat misleading, inasmuch aa it ignores- the fact, that there is something very closely akin to a State Bank already in existence" in New Zealand, in the guise of the Advances to' Settlers': Department; whioh' Hindi money, at very low interest and on most favorable conditions to land-holders anxious to improve their property. Then there is the reconstructed Bank of New Zealand, in which the taxpayers of the country are cpnsiderably interested, "and which is to some extentsubject to State control. We are not prepared to say whether or not it would be advisable jto ..bring "botic the .Advances to Settlers Department and the Bank of New Zealand, together, 'and by amalgamation constitute them a State Bank, but we have no hesitation, in affirming that the State ought without delay, reserve^ to. itself the solo, light, of* note/ issue in the -colony. • At present each of tho banks doing business in Now. Zealand is allowed to issue its own

'promissory notes— for that is wjiat bank notes really 'are-^and reap the profit- on the amount they represent, to say nothing of that represented by those which, through rarious causes, are never presented for payment in gold. profit' is a large* <mc£ and ought to be the perquirite of the State, inasmuch as the country could redeem its note issue, whilst in, the case of a "slump," such as. wrecked so many financial--, institutions in, Australia ten years'* ago, it.i s very 'questionable whether the banks doing business in New Zealand could in an emergency pay gold .across their counters for. their own promises to pay. 'The Bank of England has on more than one occasion failed to dp, so,* and been compelled to appeal to the British Government to come to its* rescue with legislation suspending specie payments. No* country under the sun has been f more bank-ridden than this, as in the early days of its struggles, its settlers, wore made to pay through 1 the" nose' for any money they required, no matter how good the security. As high as 12 per cent, was demanded and got for well-secured advances thirty years ago; to-day — thanks 'to the Liberal Government's cheap/mo ney scheme — the -banks are willing ,to advance money on, good security for just half that rate of interest. There is much, therefore, .to be, said in'j favour "of the, establishment of ,a, State Bank, but it must 'not be forgotten that' such an 'institution could only be profitably conducted on strict business lines", and entirely' free from , political influence. The ' Conservative Opposition will,' .no- doubt, assert that so 'long." as the Liberals a are in -power these conditions are impossible. Would they be any more so under their opponents? Is' it not a fact that the collapse of the, Bank of New Zealand was solely brought about by the malign influence of the leading Conservatives of the preceding twenty yeqrs? Were not the' huge advances made during that period' on utterly insufficient security' made to' prominent members' of* that political Upas 'tree? - The 'Joint Stock banks now doing business in the colony are allowed to' issue notes to the value of considerably over a million and a-half sterling, and it is doubtful if they could redeem onehalf of them to-morrow were the demand made by the holders, for payment in gold. Why, then, should these limited liability financial institutions be

allowed kne i>fivi\S^re amd profit oi iesu- j ing paper ntoniy? That should be the cole prerogative of -the State which has something solid to offer as security for ' .the redemption of its^promissory notes, j If -.the State 'reserved to itself the sole righ'ftto issue such paper currency the banles doing business in the colony i would have to cease circulating their j own paper money and arrange with the Government for a sufficient supply of State notes on terms mutually'satisfactory. This would give the Government an increased amount of money to handle and ""free it from 'somVof* its present" difficulties. ' Space* will not' permit of further reference to the matter in Ine present issuer but we will resume the subject in an early issue, as it is one of great interest to the peoplo of tho

colony.