ADVANCES BY BANKS

Press, Volume XCVII, Issue 28573, 30 April 1958, Page 11

ADVANCES BY BANKS

Criticism By Mr

F. P. Walsh (New Zealand Press Association) WELLINGTON, April 29. “From their past actions, it is •ate to say that their eyes will remain on profits and the Minister will be notified that it is not practical to give effect to his request,” said Mr F. P. Walsh today when discussing the call by the Minister of Finance (Mr Nordmeyer) for banks to reduce overdrafts by £3om by June. He was addressing the annual meeting of the Federation of Labour. Mr Walsh said that at March 26, advances made by trading banks and the Reserve Bank stood at £ 183.4 m. They were the principal single reason for the present inflationary conditions.

“Of course, it must not be overlooked that it is a very profitable business for the trading banks, which receive an average rate of 5 per cent, on money lent on overdraft,” he continued. “Everyone must have noticed that recently the banks have been buying up valuable city, properties which can be paid for by book entries, and, like the insurance companies, have been erecting expensive buildings on them.

“It may be called progressive to replace old buildings with new, but considering the present financial position of New Zealand, is it right that assets still capable of use should be destroyed, and that money, materials and labour should be taken to erect these new buildings? “Why should the banks and insurance companies receive this preferential treatment? If they are allowed to spend large sums on new properties and buildings, why should the business houses be restricted in their capital expenditure?

“I am opposed to the expansion of credit for this or any other similar purpose, because it would be inflationary, but I want to point out that if any one part of the community can do these things by means of a book entry, then others have the right to do it also.”