BANKING PROPOSALS.

Dominion, Volume 3, Issue 880, 28 July 1910, Page 5

BANKING PROPOSALS.

6TATE BANK AND STATE NOTES. CRITICISM 'BY. THE PREMIER. A plea for the establishment of a State bank, with the right of a State note issue, was made to . the Prime Minister (Sir Joseph Ward) by a deputation representing tha Trades Council Conference yesterday. The Prime Minister said that he would like to point out that the Government had 1J millions of direct interest in the Bank of New Zealand. Mr. Carey: It should have been made a State hank. Sir Joseph said that to have done that would have involved a great many millions. ' Tho Government had a majority on! the directorate, in tho control of the bank, and as far as the audit branch was concerned. It was his opinion that as long as this country was associated with- the Bank of . New Zealand as a shareholder, and with the control of the bank itself, it would bo impossible to give effect to what was being urged—tho establishment ol a State bank.. In other j words, there could not be two - Stato banks running aloiig in this country. If tho State attempted to set up a State bank, it must create directly a' considerable financial liability; indeed, it would cost many millions to secure the profits that ;were now being earned by tho banks in New Zealand. Regarding'a State note issue, years ago ho prepared a Bill for the issue of Treasury notes, , and the abolition of bank-notes. It was not put -into .operation, .however, because his colleagues did not see eye to eye with him on the matter. ' He regarded, the issue of State notes which was being made in eome. countries as only a State note issue in theory. In practice, ■as they would find before very long, they would not'he : able. to .do any more thari undei thu former, system of- bank-notes. The ordinary issue of what were called State notes from the point of view of utilising a larger number of them, in the interests of the people, unless taprc was done, was. a fallacy; and a delusion, and in a country which embarked on the issue of paper was not going to make the financial position" any 'better.. The issue of Treasury notes, with an-adjustment of the banking system, was quite another matter. It was e very responsible matter, and those upon whom, the responsibility rested could not act rashly in regard to it.- They must consider.the general position of tho people, and the necessity of not doing anything that would bi! calculated to bring about, a revolution in the financial world, because the first to suffer would be tho working-classes. Before the Government took up,such a lino of action', \it .would havo to .be perfectly .satisfied that it was sound ami effective, and not going to dislocate the trade, commerce, and finance of this.country. Once again he wished bv emphasise the necessity for caution, bejause' a • hasty decision might. involve, a - wrong decision. •