BANK ADVANCES.

Ashburton Guardian, Volume XXXIX, Issue 9633, 13 June 1919, Page 5

BANK ADVANCES.

NEED FOR CAUTION.

WELLINGTON, June 13

At to-day's meeting of the proprie'•tors of the Bank of New Zealand, the chairman, Mr H. Beauchamp, referring to complaints that the Bank is not affording adequate support to the trade and industry of the country, deciared: "There is no justification for ,such complaint's. The Bank is turning away no business offeretl by its cusi tomers that .can, „by any means, be Wade suitable for a. Bank's consideration. You will of course clearly {Understand that there are limits to advance ''business beyond which it would be injudicious for a Bank to go' A Bank's province is, properly speaking, to finance- trade, it should not sink money in land, buildings, machinery and . such-like. The money, for those should be provided by the customer's own capital, and the Banker should not be asked to assist until, work:and trading commences. Sometimes, however, we are approached with'a' request to find all the money needed to start some new industry, whilst the' promoters themselves propose to provide nothing, or next to nothing, in the way of capital. Applicants must not be surprised in such cases if their applications are refused, or sanctioned only on condition that a reasonable amount of capital is'provided by those primarily in-, terested. ... . : .

"At the last" meeting . of; shareholders- of Barclay's Bank, Ltd, the De-puty-Chairman,'; Sir Herbert Hambling, said: 'Wo receive many applications fronl< people who hardly understand .the\ difference-, between banking capital and capital that is necessary to run their business. They do not quite understand that a Bank is quite willing'and anxious to finance trade, and quite willing to give to their customers temporary accommodation to help them in tneir rtrade; • but: it is not the province \oi a 1 Bank to; employ .their money in providing the commercial community witli fixed capital. There is a big distinction. ■ A tradeiv^yrites that he has an opportunity of buying some • neighbouring, business for so much, money, and will we please lend :him the money to do so. If he is_ successful, he will pay back after a period of many years, but if he is unsuccessful, you will lose your money. That is not a security, and that is not the method in which a,Bank should employ its money. In trading, in tn*o export and import of goods, in temporary accommodation to theif customers, you will find that the T»g Banks which are in existence at the present time will give every case #fte most sympathetic consideration, and I think they will give them help, but not supply them—nor should they expect it— with fixed capital for their business. 1 In these words, Sir Herbert has set out his Bank's position and ours, and the position of every other Bank doing a legitimate banking business. I echo his views, and would add that any Bank departing to any considerable extent from the rule indicated would be running undue risks and courting disaster."