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The Pamphlet Collection of Sir Robert Stout: Volume 65

The Advantages of a State Bank

The Advantages of a State Bank

are manifold, and would be felt in every direction. One chief result would be that our domestic circulation would expand with our; necessities. We would no longer be subject to have it contracted by the fears or caprices of foreigners. It is absurd to think that the active industry of our small community should be liable to be checked because there is a drought in Australia or an exodus of sovereigns from the Bank of England. We reside in a group of islands peculiarly self-contained, affording free scope under proper legislation for the exertions of ten times the population we at present number. We have no territorial neighbours to trouble us in the way of our circulation. We might therefore hope to prosecute our varied industries and productions unaffected by the ups and downs which page 16 trouble more complicated communities. We can always find a ready market for our production in raw material—in gold, wool, minerals, mutton, and other marketable commodities. Our local industries would supply our own wants, and the exchanges speedily turn in our favour. Capital would accumulate more rapidly locally, and afford the supplies necessary for the development of our coal and iron fields, and our other manifold mineral resources. Oar merchants would effectually grasp the commerce of the Pacific. The great drawback under which we labour in consequence of our present arrangements, namely, high rates of interest and fluctuations in these rates, would disappear. A moderate and steady rate, not above 5 per cent., would be the rule. We need not follow Canada, where the banks are prohibited charging more than 6 per cent. By the operation of sound natural laws our rates of interest would be equalised and remain moderate. The advantages of a low rate of interest were thus summed up by the famous financier M. Isaac Peirre in giving evidence before a Parliamentary Committee in Paris in 1867:—"The lowering of the rate of interest is a thing desirable in all points of view. It gives rise to enterprises which could not exist if the interest were too high; it contributes consequently to the davelopment of industry, to the increase of public wealth; it augments the share of labour, while at the same time it permits all the products to be delivered cheaper, whereas the charges for interest enter for a consider, able part in the profits and in the price returned; it facilitates the amelioration of capital of all values, lauded property as well as public funds." You must have noticed that I have been careful not to make rash assertions proceeding from my own inner consciousness. All the chief propositions I maintain have been supported by eminent authorities quoted. Interested parties might pooh-pooh my suggestions as being unpractical and [unclear: in-expedient]. It is an ordinary mode of [unclear: argument] in Parliament when anything new [unclear: is] started for an opposing Minister to say that page 17 it is not within the region of practical politics, but I hold generally that whatever is for