FRIDAY, JUNE 19, 1931. BANKING AND PROSPERITY.

Auckland Star, Volume LXII, Issue 143, 19 June 1931, Page 6

FRIDAY, JUNE 19, 1931. BANKING AND PROSPERITY.

During - the present depression the observant have noticed that banks continue to make large profits—that, indeed, banks seem to feel hai'd times less than any other branch of commerce and industry. The Bank of New Zealand is paying the usual dividend of 14 1-3 per cent. It is true that the net profit has fallen by £81,000, and that instead of transferring £125,000 to reserve, as they did last year, the directors have set aside only £25,000 for this purpose; but the profits are still handsome, and what impresses is the fact that the dividend rate is maintained. It is very doubtful, indeed, whether the directors were "wise to keep the dividend up to the usual level. Financially it might have been better to strengthen the reserves still more, and, having regard to the growing disposition to criticise banking methods, it would have been wiser to be satisfied with a smaller dividend. The profits of the Bank of New Zealand, as reflected in this dividend, "will strengthen the demand for a cheapening of bank services, and especially a reduction in the rate of interest.

I}he chairman's speech at the annual meeting of the Bank is always interesting, and though to-day Mr. Watson had nothing new to say, he reminded the community of certain basic facts. The country is dependent upon the prices of primary products, and it is absurd to suppose that while these are down it can live at the old rate. Mr. Watson hopes that it will be possible to reduce interest rates, and everyone hopes so with him. Deflation means a present to all who are drawingincomes from interest, and, on the other hand, all those suffer who have to take lower wages and go on paying - tho same rate of interest. Lower wages will be accepted with more cheerfulness if interest charges fall. As to the future, Sir Harold Beauchamp said that improvement would show itself first in America, and then in Britain, but unfortunately America, as exemplified in the President's deplorable speech a few days ago, shows no disposition to take the action Sir Harold thinks necessary for her recovery. The most cheering item in all the proceedings was Sir Harold's quotation from an American paper about the certainty of change in human affairs. Because they are bad, times must get better. Or, as another American said, everything comes to him who waits, but lie has to hustle while 'he waits. With us hustle should take the form of putting our financial house in order and preparing to take advantage of the recovery when it comes.