The Daily News. MONDAY, NOVEMBER 8, 1920. A DEVELOPMENT BANK.

Taranaki Daily News, 8 November 1920, Page 4

The Daily News. MONDAY, NOVEMBER 8, 1920. A DEVELOPMENT BANK.

The recent legislation in connection with the Bank of New Zealand has drawn attention to the much-discussed question of establishing a State-owned bank, the chief function of which would be to encourage and stimulate the development of the resources of the Dominion, facilitate production, assist industrial enterprises, and promote in the most effectual manner the permanent interests and future prosperity of the country. During the discussion on the Bank Bill, Mr. J. Craigie (Tiuiaru) put in a strong plea for the appointment of a committee representative of the commercial, agricultural and industrial classes of the House to consider and report on the desirability of the Government taking steps to have a State-owned and State-managed bank. And Mi". Massev practically promised 1 hat next session a Parliamentary Committee would be set up to go into the whole question. Jt has been laid down by one authority that the chief .services rendered by banks arc the following:—"By receiving deposits of money, and massing in •sums efficient for extensive enterprises the smaller savings of individuals, they are the means of keeping fully and constantly employed a large portion of the capital of the community, which, but for their agency, would be unproductive: they are the means by which the surplus capital of one Part, of the country is transferred to other parts where it may advantageously lie employed in stimulating industry; thev enable vast and numerous money transactions to be carried on without the intervention of coin or notes at, all thus obviating trouble, risk and expense." Here are to be'found conditions that; fit in admirably with the spirit of democracy and co-operation. The large profits made by (tanks naturally direct I attention to the question of the desirability of the State adding hanking to its other successful enterprises, au'cl tiie larae interest .

now held by the State in the Bank of New Zealand goes to prove that the principle of State banking is half acknowledged, but that for some reason, which cannot logically be defended, the Government either lacks the courage to take the plunge, or secretly fears that a State bank might, be used for political purposes. Neither of these reasons is tenable, and the success of the, Post Office Savings Bank, as well as of the Public Trust Department, emphatically shows that the State has already the money and the machinery wherewith a gtate bank could be founded by utilising the capital now invested in the Bank of New Zealand. At the Allies' Economic Conference held during the war the subject of developing the resources of the Empire so as to make it as far as possible self-con-tained was fully discussed, and the need for the institution of Statecontrolled banks for assisting in this great and important work, as well as in fostering trade and commerce, was strongly stressed. In the development work of the Dominion that is now so urgent it is the men of small means and sterling character who must be relied upon. These are the men who at present have little, if any, chance of financial help by reason of the lack of that margin of security which is required by banking corporations. As a matter of fact, the whole of the industrial and commercial activities of the country would be greatly assisted by an independent State bank, which would also undertake the business of advances to settlers and workers. The nominal value of the shares now held by the Government in the Bank of New Zealand is a million and a quarter, but the market value should not lie less than double that amount. In addition there are the funds belonging to the various departments now held by the proprietary Bank, which has obtained the finest and most remunerative monopoly that any financial institution could desire. It may confidently be asserted that if a State-owned Bank were instituted it would be in the strongest possible financial position. The Bank of England was originally an engine of the Government and not a mere commercial establishment; the Bank of France is another ease in point, and, coming nearer home, the Commonwealth Bank of Australia has given ample proof of what a State institution of that nature can accomplish for the people. Mr. Massey referred to the "democratising" of the Bank of New Zealand, but in the light of the facts relating to that bank it is the essence of autocracy and plutocracy. What is needed is a bank for the people of all classes, more particularly for encouraging production. and the more the matter is studied the greater becomes the certainly that the time has arrived when the New Zealand Government should add a State Bank to its democratic enterprises in order to secure the permanent interests and promote the future prosperity of the Dominion,