STATE BANK PROPOSAL

Manawatu Herald, Volume XLIV, Issue 2520, 19 December 1922, Page 1

STATE BANK PROPOSAL

CRITICISM OF NEW ZEALAND INSTITUTION. REPLY BY CHAIRMAN. In the course of: his remark.-, to the slmrehilders of the Bank of. New Zealand/ at the half-yearly meeting held in. Wellington last week, the chairman of directors, Mr George Elliot, made some -lennuks

in reply to statements concerning the bank. “We feel called upon to

reply,” he said, “to the unfair criticism to which the bank has been subjected during the recent Parliamentary election campaign by many of the candidates, who advocated the*establishment'of a State Bank; at the same time, we rcognise that

the ramifications of finance are so extensive and far-reaching in their results as not to be easily understandable by those who have not the opportunity of'acquainting themselves lirst-hand with the real position of affairs. It would be well for the public to remember that the criticism of inexperience is necessarily of little value', and it should therefore lie largely discounted. N “We do not resent fair criticism but we do object to wilful misrepresentation through the suppression of known facts, which, if stated,

would put an entirely different plexiou on the position. For in-' stance, it is well known that the banks in this Dominion are far

more heavily taxed than are any other taxpayers in the country, or even in the Empire. It is simply

Wilful misrepresentation to compju’o the interest rate of the hanks here .with those ruling- elsewhere, without taking into account the much more favourable conditions existing outside the Dominion--more especially in the case of the State Bank of a neighbouring territory which makes no contribution j whatever to the Federal 01 > a ® j Governments by way of income and . land tax, and pays no rates to the local authorities. “As a matter of literal truth, every person in Australia has to hear a greater proportion of taxation because the Commonwealth Bank pays v no taxes whatever. It is true the Commonwealth Banks has, during j the ten vears of its existence, made i large profits; it 'no doubt makes fewer losses limn other competing banks, for it lakes fewer risks. The extent to which in a time of stress the Bank of New Zahmd fulfilled its I obligations lo its customers and to the country is revealed in our bal-ance-sheet of March 31, 1921, and we are content to rest on the position therein disclosed. “Many State industries Have been tried in various parts of the globe, and have proved disastrous finan-

cial failures. Tliere is, unioxtiu.ately, arrowing inclination to look to the Government to start all kinds of enterprises and to regulate everything by statute. Paternalism in Government has a malign influence on the minds and thoughts of the people; it warps the.individual judgment, kills initiative, and destroys that sturdy independence and selfreliance which is necessary to build up a free and independent people; spring from this tendency of mind clog add obstruct; they lower the power of productivity in individuals, and increase the cost of everything produced. They put sand in the bearings of the industrial and economic machine, and they increase the cost of Jiving enormously. • Carried‘lo an extreme they lend to conditions similar to those now ruling in Kussia. where a great tragedy is being enacted; where a whole nation is in the throes lof misery, crime, disease, starvation and death; and where, for a pittance, men and women are forced (. 19 hnnre n. dirv at tile Doillt

of the bayonet. It has indeed truly ,een. said that the least governed lation is the best governed nation. “You will remember that, early in i<)2l, as the result of excessive importation of goods, and ol' the heavy fall in the value of many of out primary products, the Dominion was faced with a financial crisis, tlie-se-verity of which could be estimated only by those for the financing of tj|is whole country s business. There are two methods of meeting such a crisis; one is to keep interest rates low and to lend sparingly; the other is to lend freely, even up to the limit oi a banks resources, at the same time increasing interest rates so as to compel realisation of assets, and thus get back to a normal position as quickly as possible. We, in common with the other banks kei'e, took the latter course, with the result that almost all the business houses m the Dominion have weathered the storm with a success that has reflected the greatest credit on the financial stability of the country. Had we kept interest rates down, lent sparingly, . and placed money in first-class Government securities that would

have yielded a 'high rate of interest for many years to come, the bank would have benefited but the country would have experienced a farreaching collapse.”