The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News. The Echo. THURSDAY, APRIL 23, 1931 THE SYDNEY BANK CRISIS.

Auckland Star, Volume LXII, Issue 95, 23 April 1931, Page 6

The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News. The Echo.

THURSDAY, APRIL 23, 1931 THE SYDNEY BANK CRISIS.

For the cause that lacks assistance, For the wrong that needs resistance. For the future in the distance, And the good that toe can do.

A few days ago Mr. J. E. Fenton, formerly one of Mr. Seullin's colleagues, produced a rather alarming sensation in Australian political and financial circles by referring in ominous terms to the New South Wales Government Savings Bank, and by indicating that its stability or solvency was seriously threatened. Most of the Australian newspapers simply omitted publication of these remarks, fearing that they might produce dangerous reactions. But the "Labour Daily" charged Mr. Fenton with deliberately attempting to wreck the bank, and denounced him for falsely and treacherously misrepresenting the position of this great institution. Now, however, the disaster that Mr. Fenton suggested as a vague possibility has come to pass; for the Savings Bank has closed its doors. While it is not probable that the suspension of the bank's activities will be more than temporary, the importance of this most unfortunate event cannot be ignored and should not be minimised. The bank's depositors number over 1,300,000, and more than £70,000,000 is held on their account. The law requires the bank to keep at least 20 per cent of the amount of its deposits at call or short notice, and its cash reserves of £16,000,000 Avould have been adequate under ordinary circumstances. But these are no ordinary times, and the bare fact that nearly £30,000,000 of the bank's funds have been invested in New South Wales Government stocks suggests at least one important reason for this sudden collapse. The President of the bank declares, no doubt quite honestly, that the institution is perfectly solvent. But he admits that recently there have been heavy withdrawals, which he attributes to political rather than financial causes, and he has indicated that the only available remedy is amalgamation with the Commonwealth Bank, which "would give depositors more effective protection than is afforded under the State's control." No further evidence than this is needed to substantiate the charge that the depressed and disordered financial condition of New South Wales is chiefly due to lack of public confidence in Mr. Lang and his policy. For weeks past there have been large withdrawals from the Savings Bank and transfers of capital from New South Wales to Victoria and Queensland, and these operations have been publicly attributed to distrust of Mr. Lang and fears for the future. It is not likely that Mr. Lang's views will be affected by this catastrophe. But hundreds of thousands of the people of NewSouth Wales, now that they are deprived for the moment of means to carry on business and "keep going," must realise that they themselves represent to a large extent the "capitalist" class against which Mr. Lang is constantly fulminating, and their present inability to pay accounts or wages or to meet ordinary living expenses should open their eyes to the disastrous possibilities that the Lang regime involves. So far as the Savings Bank is concerned, the situation is by no means hopeless. It has ample assets, and it is proposed that its affairs should be taken over for the time by the Commonwealth Bank, which will make advances to the unfortunate depositors who find their liquid resources for the moment "frozen." Mr. Lang and his supporters are clamouring for "amalgamation," but the Commonwealth Bank will discuss nothing but "absorption," carrying with it complete control of the Savings Bank's business, and removing it entirely from local political influence. If this plan is carried out, the depositors should escape eventually Avithout serious injury. But the disorder of public and private finance must mean heavy loss to the people; while the ; damage to the public credit and the fall in the value of public securities must tend to depress still further the financial condition of the State and the Commonwealth, and to render their recovery more protracted than before. (