The question of a "State Bank" has occupied the attention of many persons in the Colonies, especially those who have had to grapple with the stern realities that beset most in their colonial career, the benefits anticipated it would confer being looked upon by each from their several standpoints. It is a question prominently brought forward on behalf of the working classes at the present time, by those who outwardly champion their cause, as a means to alleviate their circumstances and place them in a better position.

But to point to a bank, and that a National Bank, with a "National Bank-note Issue," and assume such issue without; taking into consideration how it is to be effected—upon what principles? what its obligations? how it would affect banks and other monetary institutions now doing business within the Colony? as a question of currency? how maintained? how guaranteed? if metallic? the amount of reserve, and how obtained? are only a few of the many subtle questions that surround such a measure.

The proposition "State Bank" barely stated, unsupported even by theory, much more by any practica] scheme to sustain it (so far as I am aware), I conclude that, for the present at least aye, and even for some time to come must lie in abeyance, waiting further developments.

Colonists generally are so often reminded of our national and private indebtedness, our exports and imports, of what they consist, number of inhabitants, and other items of genera] information by the press, that it would be superfluous to quote them again except in support of a reference.

Public opinion, embracing all shades of politicians, decrees that here, in New Zealand, "shall be no further borrowing on the part of the State." All financial circles in England applaud and commend the doctrine; a great section of the community in New Zealand, composed of monetary institutions, companies, and large landowners endorse the fiat.

There are men who, either from pride, avarice, or devotion to the State, are always found ready to accept the offices of Ministers of the Crown. Among their great responsibilities are—keeping up the credit of the State by providing for the payment of the interest on our borrowed capital, the maintaining the exports of the Colony, the opening up of the waste lands of the country, the employment of the population, and so forth.

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It is of the first importance to know that the productiveness or the elasticity of the country can be relied upon, if developed.

With a population of only 650,000, of all ages and sexes, and occupying little more than the sea-border of the country, our exports are nine and a half million sterling (£9,000,000); and, with a public debt of forty million (,£40,000,000), we have thrown down the gauntlet, and declare we will borrow no further. Are we, then, to increase taxation? That, also, is denounced by the voice of the people. We cannot, do away with our responsibilities; nor can we easily consign to oblivion a young nations future for even a short time. By allowing things to proceed as they have been, would be retrogression, and a stigma upon our past energies, our national progress.

To break up great landed estates,—to prevent large areas of land passing into the hands of single individuals,—to relieve the occupier of land from taxes on improvements on his estate,—to create small freeholds, and otherwise holdings of Land, to place settlers upon them,—to find work at remunerative wages for the unemployed,—the purchase of lands from the natives,—the necessary surveys,—the making of roads and bridges,—felling of timber, with a view to prepare the waste lands for cattle and sheep, thereby increasing our exports, are questions that must be solced.

To devise means for the raising of capital wherewith to accomplish these great and necessary objects is of paramount importance. The transfer of some of our public stocks has been resorted to for this end. But that system cannot continue; it is already at an end. It has been suggested to issue "Government Bonds," bearing interest, negotiable within the Colony; but that, certainly, is equivalent to borrowing, and would be taken advantage of by all banks doing business within the Colony.

It is also on the tapis "that the Government borrow or procure money from English capitalists at a low rate of interest, and lend it out through some of the public offices to settlers." In whatever shape such a questionable proposition may be brought forward, it includes within it, all the elements of a borrowing policy, with State security to a foreign creditor, including taxation, and would entail an immense expense in inspection, valuation, banking, and clerical assistance,

We have not built our present prosperous position upon speculation, or by trading in competition with other Colonies, but upon the actual produce of the soil; and with manual labour, aided by Science extracted the treasures of the earth, which our exports testify, in wool, frozen meats, dairy produce, grain, tallow, hides, flax, etc., with gold, silver, coal and other minerals, and gum.

We have yet in reserve upon which it is desirable to operate seven to ten million (10,000,000) acres of land; suitable for pastoral, agricultural, and mining purposes.

The question then naturally arises, How are we to take advantage of our position, without increasing taxation by borrowing in a foreign market, or placing Government Bonds, bearing interest, on the colonial market?

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With these obstacles standing in our path of progress, it becomes us to enquire, Are we using the powers vested in us, as a governing body, for the benefit of the State and those we profess to govern?

We have experienced the monopoly of land, and destroyed its power; we have seen the combination of capital, its oppression, and its withering influences, and laid a sap to its foundation; we have also seen and experienced the evil effects of companies with limited liabilities in some instances obtaining the hard earnings of the artisan and labourer (as cash depositors) by giving a high interest for their savings, to build up and sustain a worthless imposition, A further enumeration of those parasites that engraft themselves upon the State and community would not serve any purpose, except as a warning to be avoided. They are falten; a new order of things is replacing them. The working classes have partially asserted their right to deal with the public estate; and, with a view to further aid, in a constitutional manner, so as to be able to resist any combination of force that may assail it, have conferred upon the women of this country an equal political power of vote—"Women's Franchis."

The difficulties that surround the establishment of a "State Bank" in New Zealand for some time to come happily cannot be advanced in a substitute that will confer equal advantages in aiding the Colony to maintain its national credit, develop its resources, employ its population, and foster its trade and commerce.

There are six banks, Foreign and Colonial, with a paid-up capital of close upon six and a quarter millions (£6,125,000) sterling, doing business within the Colony, with 230 agencies only, and these include several in each large centre. The number of towns represented by banks in New Zealand is very small. The enormous business carried on by them can in some measure be computed by their note circulation within New Zealand, which amounts to, it is stated, between three and four million pounds (£3,000,000 and £4,000,000) in notes annually. The earning power of these banks can also in some measure be ganged by the interest (after deducting all ether expenses and charges) they pay to the shareholders in their respective banks—from five to fifteen per cent., and in some instances with bonuses. It must be borne in mind that the greater portion of these amounts of interest goes out of the Colony, so that the country does not reap the advantage of its being expended here.

If we proceed with the note circulation in proportion to population, and assume it is the same in New South Wales and Victoria, with their one and a quarter million of inhabitants each, and add Queensland, South Australia, all other States, and England, where their business is conducted, and ask, If a population of 650,000 can employ three to four million in bank-notes as a floating paper currency upon a capital stock of six and a quarter million sterling (which also represents all the other places named), what amount (after providing for all outlay in connection with their several extensive establishments) is represented in note circulation alone! Will twenty million (£20,000,000) cover it? And if this postulate is tenable and reasonable, we obtain a glimpse of the indirect burden page 6 placed upon consumption from this quarter. Who bears it? I need not enquire.

Give banking institutions all the freedom it is possible for them to possess, and encourage capital, or the representative of capital by allowing it to go untrammelled. Nevertheless, I infer the State, too, has its claims and obligations, and must exercise its prerogative in respect to a currency that proves itself so valuable to every nation in the world.

To establish a system that would be the means of opening op the country, placing settlers upon the laud, increasing our exports, employing those out of work at remunerative wages, without borrowing abroad or at home, and also without further taxation, at the same time maintaining our national credit, and which system could not and must not interfere with the freedom and trade management of banks and other monetary institutions established in the Colony, is the great problem.

Placing ing settlers upon the laud should embrace the ultimate right of "freehold," giving them a permanent interest in the State, a tangible security in the future for them and their families, and on the part of the State a surety that the land will be worked advantageously, with improvements, and not left with its properties worked out and worthless. Where "Loans" are required, if deemed expedient, I would suggest as favourable as possible upon the sinking fund principle, with a provision that no mortgage or other lien should lie against the property until all claims of the Government are extinguished.

If the circumstances of the Colony will not admit of the establishment of a "State Bank," as I have before briefly referred to, we then must consider the next practical alternative—the issue of