The Daily News. WEDNESDAY, AUGUST 4, 1920. A STATE-OWNED BANK.

Taranaki Daily News, 4 August 1920, Page 4

The Daily News. WEDNESDAY, AUGUST 4, 1920. A STATE-OWNED BANK.

When introducing his Dominion State Bank Bill in the House of Representatives recently, Mr. W. A. Veitch no doubt was quite aware that the only hope of the measure being passed depended on its being adopted by the Government. As the Premier is -content with the Government being a junior partner in the Bank of New Zealand, and considers a State Bank could not be started without the Government suffering considerable loss by the damage that would be done to the institution iE which they are partners, there is little likelihood of the measure, becoming law yet awhile. That a State Bank will eventually be established may be'taken for granted, but not uuti! vested in- j terests give way-to public opinion. On the broad principle of public policy in relation to a State Bank, Mr. Massey was discreetly silent, merely confining his arguments to the so-called partnership in the Bank of New Zealand, the profits derived therefrom, and the assistance rendered by the banks in raising' loans for the Government. As mere sentimental reasons these adverse points will pass muster, but it will be noticed that the Premier failed to educe a single logical argument against State bank-j ing. Instead he was at some pains | to prove what an excellent institution the Bank of New Zealand is, though he evidently .lost, sight, of the fact that such testimony was an unanswerable argument in favor of Mr. Veitch's Bill. It is-quite true that the Bank of New Zealand has served the Government well. It is also truo« that the Government has served the Bank well. The Government saved the life of the Bank, nursed it through its troubles, and enabled it to grow strong and lusty, with the result that to-day a dividend equivalent to 28 per cent, (allowing for income tax) has been declared, without taking, into consideration heavy depreciation charges, etc. No more convincing argument in] favor' of a State Bank can be used than the phoenix-like revival of the Bank of New Zealand from its own ashes. In view of the attitude adopted by Mr. Massey on this question, the main point for consideration is whether the interests of the shareholders of the Bank of New Zealand are to be regarded as of more importance tiidu the interests of the Dominion, especially in relation (to development. Mr. Veitch's Bill is practically a copy of the Commonwealth State Bank Bill, the success of which Mr. Massey admitted. It docs not interfere with the existing banks, but aims at the establishment of. a State Bank that would enable the country's finances to be !j?ne-i fited as Australia's had been, and] there has never been a time in the I history of the Dominion when] such benefits were more urgently] needed than at present. There are J several ways in which a State] Bank can be financed, Mr.] Veitch's proposal being that the Treasury should advance half a million for working capital. With that as a foundation, and with the funds of the Public Departments and local bodies added thereto,' ample finances would be provided wherewith to carry on. A State BaiJc, hownver, would naturally attract a fair share of general business. Moreover, it requires to i have a larger scope than is possible in the case of an_ ordinary bank. To be of the greatest benefit to the country it should embrace the objects of a trading and developmentalinstitution, utilising 1 the best points of, the cartel of Germany and the trust of the United States, and it might lead to the creation of a Board of Devel-1 opment which would be of su-i preme importance to the prosperity of the country! Curiously enouKh the Government is already-

workinf ftioiig these lines in its repatriation scheme, and no more convincing illustration of success in that direction can be mentioned than the way in which State money advanced to returned soldiers ,for development purposes is proving a sound and beneficial policy of finance. Ordinary banking systems hold no place in which the human equation' 4 is a factor, though they utilise the method of guarantee. The special circumstances of the present reconstruction period call for enlightened and, progressive banking facilities, and as the banks cannot venture into the field of operations necessary for developmental work, a State Bank becomes an absolute necessity. Mr. Massey says he is not very much in love with State-owned institutions of this kind. There are times when even a Premier should not be guided by what he loves, but by the exigencies of the country, and from the latter viewpoint the weight of evidence and argument is overwhelmingly in favor of -a State Bank. The only legitimate fear that should disturb his peaqe of mind on this matter is as .to whether such a bank would be properly managed. The success of every commercial undertaking depends upon effective and efficient management. There should be no doubt either on this point, or on the equally vital question as* to whether that efficiency would be sacrificed on the altar of politics. j Admittedly the proposal is a large i one to, tackle, but in view of the success Relieved by other State Banks and by the commercial undertakings of' the Government, there need be no anxiety over |h? ! success of such a bank in the .])o'-' minito. It is urgently > needed—how urgently few people fully "ealise—and it would be a source of such great strength and benel ; t to "the country that , is , pre-emi-nently desirable to lose as'little tirqe as possible in facing the issue and conferring a' great boon on the. country ,by establishing a St'ats Bank. -