BANKING TO-DAY.

Auckland Star, Volume LXVII, Issue 28, 3 February 1936, Page 7

BANKING TO-DAY.

MONETARY POLICY. Widespread Offensive by " Cranks." REPLIES BY EXPERTS. United Press Association.—Copyright. LONDQN, February 2. Bankers, in the course of their annual reviews, chiefly concerned themselves with discussing 1 their functions in the present-day economic system. Mr. Reginald McKenna, chairman of the Midland Bank, apparently considered the time ripe, in view of the widespread offensive of cranks," notably the Townsend scheme supporters in America, to make an authoritative pronouncement on.monetary policy. Mr. McKenna pointed out that "the total supply of money has nothing whatever to do with its distribution among classes or individuals. Monetary management can do no more than remove obstacles in the way of industry and expansion." Mr. J. W. Beaumont Pease, chairman of Lloyds' Bank, Limited, deplored the belief that it was "within the capacity of bankers to extend credit indefinitely and control not only the volume but the direction of credit, assuming omnipotent knowledge of what type of loan is in the national interest and what ought to be withheld on the ground that it is antisocial." Banks' Duty to Depositors. Mr. Beaumont Pease opposed attempts to run banks on excessively general principles, and held that bankers should deal with every proposition on its merits. It was not part of a bank's duty to lock up depositors'j money in permanent loans of a capital nature, and therefore, while most sympathetic with attempts to rehabilitate depressed areas, the banks were able to assist them only indirectly. Bankers had never been prepared to supply industry with permanent capital. Bankers also stressed tlie continued dilliculties of the export industries. Sir Christopher Needham, chairman of the District Bank, Limited, foretold that, while the general lending business of the banks might be somewhat increased by further home trade development, a substantial increase would depend on the revival of foreign trade. Mr. E. Ornie, chairman of Martin's Bank, Limited, hinted that patience with the slow recovery of the export trades was not the proper attitude. Other Aspects Stressed. The spokesman for Barclay's Bank, Limited, contrasted the 15 per cent increase in the output of manufactures with the 10 per cent decline in exports from 1930 to 1935, and emphasised that unless there was a recovery in the foreign markets great adjustments would bo necessary. Several bankers stressed the important part that the building boom had played in the recovery, and asked what would replace it now that it showed signs of slackening. Both Sir Christopher Needham and the Hon. Rupert Beckett, chairman of tlie Westminster Bank, Limited, considered that the Government public works schemes had come at a most opportune moment and probably would continue to employ tlie industries subserving the building trade. None of the bankers went out of his way to applaud the Government's cheap money policy. Mr. Colin Campbell, chairman of the National Provincial Bank, Limited, termed it satisfactory from the viewpoint of the Treasury and the Dominions, but not for depositors and new investors who were forced to purchase annuities. Bankers unanimously emphasise the necessity for freeing international trade from constricting shackles, and consider the stability of exchanges a pressing need. Some even favour the resumption of foreign lending, though none touches the question of how far this would result in higher interest rates and how far it would cause gilt-edged to fall. However, it is now recognised that the cljomestic recovery induced by monetary management cannot continue indefinitely. The tendency is now to look toward the wider problem of restoring world trade.