MAKING OF A BANK.

Auckland Star, Volume XLVII, Issue 68, 20 March 1916, Page 7

MAKING OF A BANK.

AUSTRALIA'S NATIONAL INSTITUTION. STARTED WITHOUT CAPITAL. ', GOVERNOR IN AUCKLAND. How the great State bank, the Commonwealth Bank of Australia, was ' created without capital to become a . striking example of the success of : national banking, was described in a con- , cisc review of its history by Mr Denison Miller, governor of the bank, to an "Auckland Star" representative this , morning. Mr Miller nrrived in Auckland. from Wellington. , The bank, he said, waß incorporated by special Act of the Federal Parliament, and came into operation throughout Australia and in London on 20th January, 1913. It is nnique as a bank in that it 'began without any capital, but on the day of its opening the : Federal Government made a deposit of £591,804, the total deposits on that day ; amounting to £1,994,463. This pro- , vided funds for carrying on the ordi- , nary hanking business. The bank was , established by the Commonwealth Gov- , eminent in 1911, as part of the Constitution, which gave to the Commonwealth Government powers to control banking. The Act passed both Houses of I'arlia- : ment by a large majority, and the bank only came into existence, opening, as has : been said, in 1913. As no new bank had been established in Australia [or a. great i many years, it was felt that there was i room in the ordinary couree of business for the establishment of another bank, i and further, as the Commonwealth Bank ! has at the back of it the whode of the , resources of Australia, and also the sup- , port and approval of the people—who ■ looked, and do look, upon it as their own bank—and as tho Prime Minister of that : day (Mr. Andrew Fisher) stated in a i speech at the laying of the foundation- • stone of the head office, "every person .in Australia has an interest in this bank," the institution made a powerful 1 appeal to the people at large. ' NO CAPITAL TO START WITH. ' True, the bank had no capital to start t with, but such was not necessary. The public found the capital, and the support of the Commonwealth is the security the people look to for their funds [ lodged with the bank. The bank docs ordinary banking busi- ' ness throughout the Commonwealth, and has established brandies in most of the principal cities and towns. It has one rate of interest for both deposits and advances throughout the Commonwealth. The borrowing rate for the ordinary overdraft is 6 per cent., ■while advances are made to churches, societies, etc., which do not distribute their profits among shareholders, at 5 per cent., and advances are made to municipalities and other governing bodies at 4J per cent. The rate allowed on fixed deposits for six months is 2 per cent., for twelve months 3 per cent., for twenty-four months and over 3J per cent. The savings bank department, from the commencement of the bunk, has been a very important side of the business. The growth of the deposits has been steady and continuous. The rate of interest allowed is 3 per cent, on monthly balances up to SIS, and on Otli March instant there were 252,233 accounts, representing deposits of .€8,384,971 in amount. 'The fact that the Commonwealth Bank is maintaining these above-men-tioned rates,'' Mr. Miller continued, "during tho war, has had the effect of keeping rates normal during this most exceptional period in the history of banking. THE BANK AND THE SOLDIER. "The bank has also attended to the requirements of soldiers both at home and abroad. Branches and agencies have been established in every camp, nnd moneys made available in Egypt, Malta, and England, so that the soldiers of the Common weal til can draw what is due to them when they arc in the countries 1 have mentioned, interest being allowed on the amount deposited until withdrawn by the soldiers themselves or bhosc to whom they have allotted part of their pay. "At the outbreak of the war the Commonwealth Bank ivas able to assist . many Australians in Great Britain, as •' the bank did not observe the moratorium in England. Many Australian firms and ■ others availed themselves of the bank's . assistance in providing funds in London. . The fact that the bank was in existence. ; and that it could be relied upon to afford , assistance should fhe necessity arise, ! had n, most steadying effect upon the i financial situation in Australia." i With regard to the profits of the bank . Mr. Miller explained that they were . applied as to one-half to the creation of > a bank reserve fund, and as to the other . moiety to a fund for bhc redemption ■ stock issued by t'hc bank. The bank . had authority to issue debentures up to - £10,000.000 sterling, but had not yet • issued nny. Any excess was to be applied - to the reduction and redemption of Com- > monwealth and State debentures taken j i over by the Commonwealth. I