A STATE BANK.

Temuka Leader, Issue 1472, 25 February 1886, Page 3

A STATE BANK.

“An Old Settler" writes as follows to the Dunedin Evening Herald You have in several leaders been advocating a State Bank, but 1 regret to see that those who ought to be (he leaders in such an institution are against it. I will, with your permission, give your readers an idea how we could complete our railways and other important works without resorting to borrowing. Let the Government of Hew Zealand issue £1,000,000 of notes of the value of £l, £5, and£lo, £250,000 to be dated the Ist day of April, 1886, and payable three years after date, £25,000 at each of the following places } —Invercarr gill, Lawerence, Dunedin, Titnaru, Christchurch, Wellington, Auckland, Neb son, Napier and New Plymouth. Pay all wages in these notes after they haye been made a legal tender. The second issue, July Ist; third issue, October lot; fourth issue, January Ist, 1887. While these notes were running the lines would get finished, and no interest would have to be paid on the money. When the time approached for meeting the first £25Q,0Q0, the several post offices could be made the places at which the notes could be cashed if presented for that purpose. The pro bability is that very few would be presented. Such would be the prevailing prosperity that no one would ever think of it, but the notes would get so spread over the colony that it would be possible to make a rush at any particular place except it were done by the hanks, and in that case they would show their hands, as many notes would be destroyed and others would have found their way to other parts. I see the proprietors’ capital of the Bank of England is only £14,533,000, while the notes issued are £35,50Q,Q00. In December, 1857, during the financial crisis and the bank rate waslQ per cent; the Government suspended the bank charter; immediate relief was given. The panic which had lasted three months ceased, and the huge commercial machine began to move again. Again, on the 12th May, 1866, when the bank rate was 10percent, theActwassi’j. pended for the second tinm, J re f er now to Black Friday—Overend, Guorney, and Co.’s failure.

I pointed out to you in 3 foymer letter that banks of limited liability in England are uot flowed to be banka of issue. This was decided in the case of the Craves Banking Go., which when a private concern had an issue, but when it passed from a private bank to one of limited liability, it was no longer a bank of issue., Surely the Government of New Zealand is worth more than $14,533,000, after computing its assesta at a very low rate. If so, why should it not become a State Bmk ? The notes issued would be spent on reproductive works, which is vary different from Maori wars and colonial defences.