"LEAVE IT TO THE BANKS"

Press, Volume LXXX, Issue 24364, 16 September 1944, Page 6

"LEAVE IT TO THE BANKS"

“DANGEROUS SUGGESTION” CRITICISED STATEMENT BY NATIONAL COMMITTEE (p.A.) WELLINGTON, September 15. “A dangerous suggestion—a dangerously misleading suggestion—is going the rounds to the effect that the banks can find the money for the Victory Loan. If this was a sound idea it would have' been quite easy to dp without the voluntary effort involved in a na-tion-wide loan campaign and ‘just leave it to the bank,’ ” states the' National War Loan Committee. “Our banking institutions are assisting the community to provide the £40,000,000 of the Victory Loan by giving temporary financial accommodation to their clients, but this is being done with the greatest care in order to avoid inflation of the currency. If New Zealand adopted the expedient of ‘leaving it to the banks’- they would draw on their reserve bank balances to the extent of £40,000.000.- The Governrtient would spend the money for the pay and equipment of the armed forces. Therefore it would get into the hands of individuals, giving them an immense additional purchasing power to heighten the money-pressure on a limited commodity market and smash the economic safeguard of the stabilisation system. One of the results •would be lowered wages—not in money but in the poor return through goods being high-priced. ‘‘On the other hand, if the banks advance money to their customers to buy loan stock it comes from the customers’ deposits and—to the extent of the advances—reduces the supply of money, over which the public has control. These advances are of short duration—less than a year—and the customer has to repay the amount within that period. In other words the customer borrows in anticipation of his earnings during the repayment period and curbs his expenditure in order to repay the bank. The Goverriment in thL case also circulates the loan money to the community but inflation is avoided through the steps taken by the banks’ clients to meet their obligations. “The amount of loan money directly provided by the banks,” adds the National War Loan Committee, “is very limited as the result of a definite policy approved by bankers in order to avoid inflation and other difficulties which would arise from an excessive money supply. Consequently the onus is ihrown on the people to provide the £40,000.000 of the Victory Loan.i and in meeting that responsibility they will be doing a good turn not only to their country but to themselves.” £75,000 FROM WELLINGTON CITY COUNCIL (P.A.) WELLINGTON, Sept. 15. The sum of £75,000 is to be contributed to the Victory Loan by the Wellington City Council from its renewal fund, the Mayor (Mr W. Appleton) said to-day. Eastbourne’s banner for the first section of the Wellington district to raise its quota in the loan was presented to the Mayor (Mr E. Wise) by Mr Applet >n to-day. Eastbourne’s quota of more than £IB,OOO was filled two ilays after the loan opened, and now, with subscriptions already 30 per cent, in advance of their quota, they have challenged all districts in New Zealand to a competition to see which will exceed the quota by the greatest percentage.