MUNICIPAL BANKS.

Auckland Star, Volume LXVI, Issue 112, 14 May 1935, Page 11

MUNICIPAL BANKS.

BIRMINGHAM EXAMPLE

GREAT PROGRESS,

A CHAMBERLAIN ENTERPRISE

(By W. J. GATENBY, 8.A., LL.B.)

Municipal banking was introduced into England by the Right Hon. Neville Chamberlain, M.P., Lord Mayor of Birmingham, in «)iite of intense opposition on the part of tbe larger joint stock banks. Mr. Chamberlain first sought legislative sanction and statutory authority to enable all local authorities having ii population of nvu - r>o.ooo to establish municipal savings banks. The opposition of the trading banks succeeded, and the bill was withdrawn. Undismayed, Mr. Chamberlain spent some tipie in interviews with the maiiagere of the trading banks, and a new bill wae agreed to and passed !:i August, 1016. Under the Act municipalities with a minimum population of 250,000 were permitted to establish municipal savings banks, but it was providcU th.lt they should cease to exist three months after the termination of the Great War, then being waged. The success of the Birmingham Corporation .Savings Bank wae immediate. During the short period of its existence, from September, IOKi, to October, 1919, £003,319 5/8 had been deposited and £295,708 19/1 withdrawifß24,4ll depositors were enrolled. A new private bill wns passed to continue the Municipal Bank, and Birmingham had the dstinction of having as a permanent institution tile liivt Municipal Bank in England. The head office of the bank was in the Birmingham Council House, and there were. 17 branches. Now a new heud "dice of the bunk lias been built, and there are r>4 branches. ;">1 of which are owned bv the bank and paid for.

Many Depositors. Begun as a war finance institution, the bank made tremendous progress an instrument of rehabilitation. 11l addition to ordinary savings bank business, accounts for water, gas and electricity, rates and duet bin hire may be paid at any office of the hank. The balance-sheet for March, 1933, showed cash in hand £040,200 8/5, and cash with the corporation at call £12,093.710 17/5. The depositors represent no less than one-third of the population of Birmingham, which N over a million. In March, 1934, the balance-sheet showed an increase of nearly £2,000,000, with n total of £17,0fi3.r>03. The funds of the bank may be used: (a) For investment in Government securities maturing not later than 20 years from date. (b) As moneys "at call" for the purposes of the Birmingham City Council. (c) To advance money to any depositor desiring to purchase a dwellinghouse or dwellinghouscs in the city of Birmingham, and in any adjoining area, with the consent of the local authority thereof.

The total amount advanced for housing mortgagee up to March. 1934, was £4,420,373, of which £2,844.r>54 has been repaidl The basis of the advance on niortgap'. , is 80 per cent of the valuation, in certnill oases up to 90 per cent, and the period of the loan on a table mortgage is 25 years. The bank contributes out of profits an annual sum of over £3000 to the Birmingham superannuation scheme and pays nearly £20,000 as income tax. Salaries and wages to the bank officers and employees'amounted to £61,811 8/S for the year ended March, 1034, when the net balance over all expenditure was £15,857 13/9. Tho reserve fund as at March 31, 1933. was £290,002 0/3. The present rate of interest to depositors is the same as the present rate to clients of the Auckland Savings Bank, 3 per cent. Forty Thousand Dwellings. Tho advantages to the City of Birmingham of its great savings bank would seem to bo greater than those of the Auckland Savings Bank to the citizens of Auckland in the following respects:—

(a) All the profits of the bank are used in the best interests of the depositors and of the ratepayers.

(l>) The city is assured of "money nt call." and its own ratepayers and citizens receive tho income arising therefrom.

(c) Tho city is enabled to undertake the erection of municipal dwellings and shops for letting and for sale: the income thereforni reduces tho burden of rates and circulates in the municipality. (d). Advances on mortgage to depositors only arc up to 80 per cent and in special cases up to 90 per cent of the valuation, and are payable on easy terms in 25 years.

(e) The bank and its numerous branches assist in the collection of rates and water, gas, and electricity accounts, and are a great convenience in this respect to the citizens.

It is interesting to note that by tho end of March, 1934, the number of municipal dwellings in Birmingham amounted to over 40,000. The fortythousandth house was opened bv the Chancellor of the Exchequer, Mr. Neville Chamberlain, in October, 1033. At that time 30,340 houses-were let and 330!) were sold; the average rent pel- annum was £29 per tenement, and the arrears of rent for 1033 represented only .3 per cent of the possible collection.