STATE BANK AND STATE NOTES.

Taranaki Daily News, Volume LII, Issue 36, 8 March 1909, Page 4

STATE BANK AND STATE NOTES.

(Mercantile Gazette.) The stringency of money, the inadequacy of loanable credit, and the dullness in trade, have brought to light quite a crop of what we are tempted to call "fool-linanciers," but as these people are well-meaning, we may lot them down by terming them financial faddists. At several meetings resolutions have been carried advocating, a State paper currency, and a deputation in Wanganui waited upon the Milliliter for Labor with the suggestion that public works should be paid for with State notes, and such a scheme, if adopted, would, we are assured, mako us independent of the foreign money-lenders. There appeal's to be something dazzling in this scheme of State notes, or Government 1.0.U.'5, but when closely examined it is just one degree removed from the ordinary "contideu'ee .trick" of the spieler.

According ti> the Wanganui deputation these State notes are to be used in paying for public works, presumably for labor only, or at most for labor and sucli materials as can be purchased within the colony. Whatever material needs to bo imported must be paid for in the world's currency—gold—the New Zealand legal tender notes would not be accepted outside of the Dominion. If tlit) notes can be used to pay for pub' lie works, we may assume that they would be paid! over to the storekeeper und other tradesmen for goods, and these latter would eventually use the notes for paying Customs duties and Government taxation, and the notes would eventually coane back .to the Government. Nov, the State lias to pay to the foreign money-lender about £2,200,000 annually, and certain public bodies and private institutions have to pay an additional: £1,500,000, and between these two sections there is bound to be a. keen competition for gold. The metal will appreciate, and the State notes will depreciate, furthermore, let us suppose the case of a worker who lias managed to save £2OO of State notes, and finds it necessary to leave New Zealand. From wliom will lie receive £2OO in gold for the notes! He cannot use the"notes outside New Zealand, but can use gold. The State notes theory is foolish in the extreme, and instead of business men encouraging such foolish propositions efforts should be made to put a stop to the agitation. There is also a good deal of senseless talk about the harshness of the banks. These institutions are blamed for not lending money more freelyi and accepting any kind "of security as the basis of loans. ' The people w.ho indulge in such views are unable to analyse figures. To them the banking returns arc an unintelligible mass of figures, but they are quite competent 'to teach the banks how to run their business. As a matter of fact, for the past six months the banks have strained 'their resources to meet the demands ot their customers, and anyone* who earcs to look into the banking returns will realise that the banks .have been over-trading. Instead of being censured the banks are to be commended for what they have done. Whew manv people make a mistake is in confounding banks with investment companies. Banks should never indulge in lock-up loans, that is to say, they should never lend on real estate. That class of business to investment and mortgage companies, and the tronbln at the moment ia due to the faoti that we have no such company in New Zealand. We had several of such companies, but tihey were squeezed out by our legislation. If it is held that we liave not a sufficient number of banks to cope with the increasing, business of the community, we should certainly support the contention, and the remedy is in the hands of the public, or rather the capitalistic class. The present stringency may l help /to establish another banK; at all event';, we hear 'thai a movement in this direction, is on foot in the North. Island.