STATE BANK.

Waikato Times, Volume 102, Issue 17130, 17 June 1927, Page 8

STATE BANK.

.—, —♦ ~ IS IT A PANACEA? ILLUMINATIVE FIGURES. AX INTERESTING COMPABISON.

Special lo Times.) WELLINGTON, Friday. Mr R. W. Gibbs, chairman at today's meeling of shareholders of the Bank of New Zealand, referred lo the contentions thai the establishment of a State bank would do much lo solve, all our monetary troubles. He said: — There is a State bank in the Commonwealth, and for the guidance of those who desire to know what effect the establishment of a State bank would be likely to have on finance in this Dominion, a reference to the operations of the bank mentioned may prove interesting. The Commonwealth Bank commenced operations in 1913. At that, time the advances of the joint stock banks

in Australia totalled £124,229,109. At December 31 last they had increased to £2-47,548.616, an increase of over £12:5.000,000. During the same period the advances of the Commonwealth Bank grew only to £13,010,671. If a State bank is the panacea for the financial ills' of the country, why such solid preference given to the joint stock banks by the public generally, as these figures indicate, notwithstanding that the joint slock banks in Australia for some years have

charged a higher rate of interest, to the public- than the Commonwealth Bank? The figures quoted prove that a State bank is not an important, factor in fixing the rales of interest, r.nd the preference shown is due to the fact that the joint stock banks can give a better service than any State bank can possibly give. The Commonwealth Bank for some years charged a uniform overdraft rate of 6 per cent, to the public, but in response to the law of supply and demand it increased its rate for general overdrafts from GJ per cent, to 7 per cent, as from January 1, 1925, and reduced it to 6i per cent, six months later. For years during that bank's existence our rale for best accounts was 5i- per cent., despite the fact that, while we paid the Dominion's Exchequer hundreds of thousands in taxation, the Commonwealth Bank was entirely immune. The growth of the capital (amassed solely from profits) of the Common-

wealth Bank is frequently cited in favour of establishing a State bank. A speech delivered by Hie Federal Treasurer, Dr. Earle Page, on June 13, 1921, is illuminating as to the way the Commonwealth Bank amassed its large profits. Dr. Page quoted the balances as at June 30 which the Commonwealth Covcrninenl kept with the Commonwealth Bank as follows: For eight years, 1916 to 1923, average £13,390,000; for five years of

this period, 1916 to 1920, £17,035,200. On one occasion the balances amounted to £40.000,000. On all these immense sums, said Dr. Page, the Commonwealth Bank paid not one penny of interest to the Government. Our institution gets no plums of that sort from the New Zealand Treasury. When the New Zealand Government receives from us to-morrow the dividend on its shares in the bank, it

will have received in all for the year: income tax £160,418, land tax£17,370, note tax £119,030. license £2OO, dividend £232,128: total, £530,046. The late Mr Massey, Prime Minister and Minister of Finance, publicly stated that he valued the State's goodwill in the Bank of New Zealand at 2A millions—a very handsome remuneration for the Government's guarantee—■ given not in the interest of the shareholders, but to prevent Dominion disaster —a guarantee which cost the country not one penny. None of the ordinary shareholders, I am sure, begrudge the generous reward to the Government for its services by way of guarantee at a critical time.