BANK CURBS ON CREDIT

Press, Volume XCII, Issue 27752, 1 September 1955, Page 12

BANK CURBS ON CREDIT

EFFECT ON PRIMARY PRODUCTION

MR WALSH EXPRESSES CONCERN

(New Zealand Press Association) WELLINGTON, August 31. The State-owned Bank of New Zealand was one of the chief offenders in imposing the “credit squeeze” on its smaller clients, said the president of the Federation of Labour (Mr F. P. Walsh) in submissions before the Monetary Commission today. The policy was no doubt followed with the concurrence of the Minister of Finance (Mr J. T. Watts), he said; yet the producers of the country were most affected by it, and production was being lost through it. Mr Walsh said a young transport operator had sought an overdraft from the Bank of New Zealand, and had been refused. This operator served 53 country farmers, carrying stock and goods for them. As his old vehicles were eating into his profit, he decided to renew them. However, the bank refused an advance to replace one of them.

Some bankers had acted in an irresponsible manner in permitting advances to reach the level they had, Mr Walsh claimed.

Two organisations representing primary producers were accentuating the present serious labour shortage, by erecting fine buildings in Wellington at the same time, said Mr Walsh. These organisations—which “give a lot of lip service to reducing and holding costs”—were thus competing with each other. They were seeing “who can put up the flashest building at a time when the country is suffering from shortages of materials and labour.”

However, it was not their money, Mr Walsh added. Banks, too, had set out on an extended building programme. “It comes to this,” Mr Walsh said: “If the banks want anything at all, they can get it, because they create money, and no-one is in a position to compete with them.”