SATURDAY, JAN. 13, 1900.

Waimate Daily Advertiser, Volume II, Issue 95, 13 January 1900, Page 2

SATURDAY, JAN. 13, 1900.

Questions likely to come up some time during next Parliament are the establishment of a Siate Bank, and the issue of State l.otes. Two-thirds, roughly speaking, of the Bank of New Zealand, may be said now to belong to the state. It is proposed to take over the whole institution and make it a state bank. Looking at The very great extension that has taken place of late years of the functions of the Governm°nt, and the very large state department established, a Government or state bank would certainly be a very great convenience. The accounts of all the various departments — Land, Advances to Settlers, Post Office, Government Life, Public Trust Office, Kail.ways, &c, must be Aery considerable and very valuable. Why not then have a State bank, and get whatever benefit there may be from the large accounts. Then there are an enormous number of local bodies' accounts, such as Municipal Councils, County Councils, | Harbour Boards, Hospital and Charitable Aid Boards, &c, &c, the aggregate of which must be very considerable, and which the law might say rnu&frbe kept at the State Bank. Furthermore it might be prescribed that when trustees wished to deposit money

in a bank it should be a State bank. All public loans, of course, should be negotiated through the State bank, and the banking pickings and profits connected therewith secured to the State in- ; stitution. All companies carrying on business as Trustees or Executors, might fairly be ordered to put their accounts through the State Bank. In short, an, enormous quantity of the very best and safest business mig-ht be directed with ease to tho State BlUilc, and much saved to the country that now leaves it in the shape of banklug profits, and goes into ihe pockets of foreign shareholders. That banking, properly , conducted, is a very profitable i business, everyone knows. Even ' after all the banking crisis is over on the other side the shares of the Union Bank, Bark of Australasia, and Bank of New South Wales are sold at from 50 to 100 . per cent abo^e their par value. It is argued that the State having undertaken so many business^ formerly monopolized by individuals, clearly a Stare bank has become a necessity. The argument id much increased in weight by the prospect of a fu.ith.er increase of the State's functions. If, for instance, the coal mines are to be nationalized, there will be a vast increase of bn&iness for the bank, and as the policy now being extended is followed is extended, this business will grow with excry such extension. Many politicians are convinced that a State bank is an absolute necessity in the very near future. Closely allied with the question of a Slate bank is the proposal to issue State notes. Everyone knows that a sovereign is o^e value it is, mainly bepri^^^B^ made by law legal' tcndTr in pay-^ ment of debts. Many ' other mcfcals — many other things have served at various times as mediums of exchange — which is all that the sovereign does. r i here is nothing to prevent the State issuing pound notes and providing by law that these notes shall be legal tender in payment of debts. So that one might pay debls either in sovereigns or in State notes. Tho one thing necessary is for the State to see that it gets a sovereign's worth of value for every State pound note it issues. These notes would not be payable in gold, -and probably therefore only be of use for eh dilation in New Zealand. But the Civil Service and Government payments generally might be made witlfHthem, and thus in some measure the absurd system of borrowing monsy at £3-J,- to £i per cent, per annum to pay the State services be avoided. Of course, bank notes of the ordinary circulate freely. These are supposed to be redeemable in gold. All a bank's liabilities are supposed, if required, to be paid in gold. But it is a definitely settled aud well-known fact that there is not enough gold in the world — coined gold at any rate — to pay more than 3 or 4 per cent, of the liabilities of the civilised world's bank. The fact is that actual coined gold plays but a very small part in the world's business. When we float a loan in London we never get gold out here — nor does anyone else get much either. It is simply a matter of bookkeeping mainly — entries being made in the bank's books of a credit to us and of a debit to the various so-called lenders— who thus really merely lend ut) their credit. The great danger to be guarded against in issuing State notes is over issue. If more notes are issued than equivalent value is received for or more than the trade and com* merce of a country requires, the

notes at once depreciate in va But that is a danger easily f( seen and not diJScult to obvi How the ne-w Parliament t look at Bnch ap-opoeal, it i» cti cult to cay, but as the P gressivists have received a cl mandate from the country ti ahead it is quite possible that two ideas we have been explai mg — though very cursorily — j^ before three years are over reduced to actualities.