AUCKLAND SAVINGS BANK

Auckland Star, Volume LXIII, Issue 136, 10 June 1932, Page 5

AUCKLAND SAVINGS BANK

THE NEW INTEREST RATE.

CRITICISM OF GOVERNMENT ACTION. UNJUSTIFIED INTERFERENCE. The Government, while it has taken no action with regard to rates of interest and overdraft in connection with the trading banks, has assumed authority to fix interest for such institutions as the Auckland Savings Bank. This interference with a people's bank that Juis done so much to promote thrift in tP.c community is strongly resented and will evoke a storm of protest from depositors when the position becomes more widely known. The case against the Government's action was put this morning liy Mr. H. E. Vaile. In the course of an interview, he said: — "As I am not in agreement with some of the trustees as to the attitude adopted when recent legislation was before Parliament, I cannot speak as president of the Auckland Savings Bank, but there is no reason why I should not give my views as a, private citizen and as a former depositor. "The Minister Dictates." "Owing to economical management a.nd the heavy reserves built up during its 85 years of existence, the bank could pay 4} per cent, which in these times of stress would be of immense advantage to its one hundred and fifty thousand depositors, many of whom are out of work and most of whom are at least not wealthy.

■ "But by the Act of last session control of the bank is virtually taken out of the hands of the trustees and. given over to a Cabinet Minister, who dictates what rate of interest is to be paid. Furthermore, for the first time in the history of New Zealand (and I think of any other country), the Savings Bank is taxed, to begin "with, to the extent of about £17,000 a year. It may be mentioned that the thrifty people of Auckland have already lent the Government through their Savings Bank over two million pounds at very low rates. "When the recent Act was passed it was pretended that the fixing of the interest rate was a mere matter of form, and banks affected were invited to say what rate would suit them. The Auckland Savings Bank suggested 4 per cent. After two months of unanswered correspondence, the Minister seems to have fixed the rate at 3| per cent as from July 1, and not from April 1, as formerly stated, although taxation must be paid as from the last-mentioned date. Objects and Effects.

"The three objects and effects of this unnecessarily low rate can only be: Firstly, to drive money to the Post Office Savings Bank; secondly, to assist the trading banke, with their fixed deposits, etc.; and, thirdly (and most important), to increase the Savings Bank's profits to afford opportunity for further taxation of the thrifty.

"If the Government would seriously economise, it would not be so bad, but it is hard to predict when its interference will stop. Politicians seem to think that the road to prosperity leads through the destruction of thrift and business.