A STATE BANK OF ISSUE.

Dunstan Times, Issue 1227, 4 September 1885, Page 3

A STATE BANK OF ISSUE.

The “Watchman," the organ of the in dustrial class s, in its issue of Saturday last, thus comments on Mr Bithga'e's proposals for the establishment of a State Rank of Issue :—“ We commend to the careful perusal of oar readers the report of the non. Mr Bathgate’s speech in another column. Mr Bathgate, thouoh deprecating any great special knowledge of the subject dealt with, has, nevertheless, shown in a masterly and easily understood form, the advantages that must accrue to any country possessing a State Bmk of Issue. To financiers, and to those who have made banking and its laws a stn ly, there is no doubt but that much of the speech may be placed in the catego y of the attempt of the lutle boy to teach his gran 1 mother to suck eggs ; but to the ma-s of the people outside the hanuing and financial interests, Mr Bathgate s utterances are well worthy of thoughtful and serums consideration. To separate, as Mr Bathgate has done, the circulation into two kinds, namely, one of issue pure and simple, and the other of banking proper, such as discounting, exchange, &c., makes the su l jeet far more simple than received, rs banking generally is here, as not only an issuing but as a money dealing a (Fur. Tnat banks can, and do exist, an I at the same lime return good dividends to their shareholders without a note issue, is proved by the oases quoted in the speech. “ Take the case of the London and Westminster 6mk. [ s cagital is equal fo the capital of the whole of the banks in New Zealand put together. It has twenty-two millions of deposits.it his fifteen million advances, and it has no note issue. The Union Burk of I omlon has tw-lve millions of deposits, and it has no note issue. Tr.e London and County Bank has twei'ty-seven millions of deposits, but no note issue ” It will thus be seen that some of the best known and most successful tanks in the Home country do not issue bank notes at all ; this being so, it proves that the issue is totally distinct from the Banking sys era proper, and it was the separation of these two (lifFweut operations that Mr Bathgate shows was not only possible, bub desirable in this country. That this is no new or Utopian view to take is evidenced by the Statute Book, wherein is found “an ordinance to authorise the establishment of a Colonial Bank of Issue by the Government of New Zealand to make and issue a piper currency, and prohibit the making and issuing of paper money hy private indivi luals (IGth October, 1857) ” Th : s Statute remaine 1 the law of the land for sevrn’een years and was finally expunged in IS7S- We may s ifely say that the Governme t in India knows what it is doin", and there we have a S;ate Bank of Issue (established so late as 18C3) which, beginning in a very small way, and with notes of very small amount each, now lias the astounding currency of fourteen millions of pounds sterling, whilst in the dominion of Canada, not only do they not issue notes, but they have a section of the Act which absolutely prohibits thebanksfrom charging more than sevenper cent. Bear money and a Stale Bank are not nearly so closely allied as dear money and a private corporation; had it not been for the wondet ful resources of our land, both in the ways of preduction and of borrowing, this dear money question would hj ive settled us, or we would have settled it. long ago. As it is, the question is merely deferred ; are we to settle it in the old way. or arc wo to re-adopt the old Statute 1857, and have a State Bank of Is-ue, whose notes, based on the security of the colony, will take the place of the paper now in forq : ? This question can be best answered by a very careful study of the principles and statements contained in Mr Bathgate’s speech ; the subject is of vast importance to New Zealand—it is no step in the dark, for we have the examole of otaer peoples to guide us in the production of a State Issue ; with them the experiment (if it can be railed such) has been more than successful, looking at it from the people’s point of view, for it has lowered interest, given bettor security, and advanced directly an I indirectly the most permanent interests of those countries in which it has teen tried.