STATE BANK.

Taihape Daily Times, Volume XI, Issue 3536, 26 July 1920, Page 3

STATE BANK.

BREEDERS ' PARTNERSHIP. Tke question of establishing a State jank in -New Zealand was raised by Mr V eitch, member for Wanganui, in, moving the second reading of the I)o----.niiiiou State Bank Bill in the House the other day. He proposed to follow l he fines adopted by The Common!wealth State Bank, which, had been such a great success. The Australian Government set aside a million sterling a s the bank’s working capital, but it actually never required any of this money. New Zealand would, however, under his scheme, have to provide the | initial capital of half a million.

The lPrcmjie,r. Ibefouc* .The discussion closed, gave his views of the subject, suggesting that New Zealand did not afford a parallel to Australia in banking businesses. The Commonwealth Government were not partners in any of the big banks before they started their own, but the New Zeai and Government was a partner in the Bank of New Zealand ami had found it very profitable. Mr. Wilford —Juniors partners. Mr Massey —But we have a ,larger ■say than the shareholders. Mr Veitch —But the shareholders get the biggest dividends (.171 per cent.). Mr Lyssar-—Do yon get, the largest share of (he profits? Mr Barry—lt would have died but for the State.

Mr Massey replied Hint no dvubt the Bank of New Zealand was in serious diflk'u’dios when the State, placed its guarantee behind it, but the Govment now pot a big revenue from the Bank. Hast year it received from note tax £212,(53(5, an Item of revenue not seen in the Common wealth Bank bal-ance-sheet. The Government also got £50,000 interest oil jts £500,000 of preference shares and £40,750 from its B. sha res, at so interest on current account not at call, which realised £37,.125 last year, making (he total receipts . by the Government £343.501. Mr Yeiteh—Nearly all interest on ' your own money. Mr Massey went on to say that he was not much in love with State institutions of thaf sort. He thought the outlook indicated that the Government, ‘s revenue from the Bank would increase. Some suggestion had been made that the Bank intended watering its stock. He did not know where the idea came from. Mr Veltch —I read it in the newspapers. Mr Massey said he had been .supplied with, a rough idea of the bank proposals, and .‘legislation would be brought down (his session. New Zealand had had ia jglod deal \of experience in raising local war loans, and had received great assistance from the Bank of New Zealand. One of the advantages of local loans was the low cost of raising them.. It did not seem good business Iw start -a competitive concern against a bank in which the Government was a partner.

Mr l.ysnar- —Have you no right to acquire the bank?

Mr Massey replied that he did not think there was any arrangement of that sort, and nothing in the Statute. He could think of no better arrangement than the present one, and regarded it as better than a State Bank. “Could you extend the savings banks?'’ asked Mr Luke. “I would be sorry to interfere with savings banks,’’ replied Mr Massey, who went on to say that the whole control of the Commonwealth Bank was in the hands of one man—the Governor. Ho did not think New Zealanders would agree to such a principle. ■Figures for the March quarter, showed that while notes in circulation totalled £7,77(i.5(i0, coin and bulllion in tine hands of the banks amounted to £7,807,212, which showed that the banks were in a very sound position in relat i; n to note issue. The Statute making notes legal tender fixed a limit of time, but something would have to be done in regard to this matter during the session. 'He was glad to bo able to sa> that the banks were in a safe ami soTiiid po-ition and that (he Bank of .\(M\ Zealand was a verv profitable in vest mem for the Government.