BANK CHARGE

Dominion, Volume 24, Issue 105, 28 January 1931, Page 10

BANK CHARGE

Keeping of Accounts

PROTEST BY FARMERS

Recently' the annual bookkeeping charge on all bank accounts was increased from ten shillings to £l, and in view of the fact that no extra work is involved, the New Zealand Farmers’ Union entered an emphatic protest against the increase. • To this protest the Associated Bauks replied as follows:— "In view of the very substantial increase from 3 per cent, to 41 per cent, per annum In note tax imposed by the Government upon the banks, it was essential, after very careful consideration, to Increase the lialtyearlv charge, aud it is regretted that the decision of the banks cannot be reconsidered at this stage. The question of reducing the charge will, however, be favourably considered by the banks if aud when the Government decides to revert to the former rate of note tax, viz., 3 per cent, per annum. The banks are like any other trading concerns, and are of necessity forced to pass on the increased tax to their customers, and are fully justified in so doing. ’ The notes in circulation are now costing the banks 7 per cent, per annum, and consequently the note issue would be conducted at a loss if some' means were not introduced by which the banks could, to some extent, recompense themselves. "It is true that the banks do earn large profits, and it is equally true that other trading concerns do so also, but it is difficult to understand why the banks are singled out for criticism. The profits of banks are earned by the employment of shareholders’ funds which are largely owned by people of moderate means, aud further, the net return on capital and reserves (virtually owned by the shareholders) is in the vicinity of 7 per cent, per annum. I think you will admit that this is a very modest return when compared with other commercial ventures that show a relatively higher net return on the capital invested.”

Before the Prime Minister, Rt. Hon. G. W. Forbes, left for the Imperial. Conference, he stated that if the banks insisted on making the increased charge, he would look into the matter. In accordance with his statement, the ActingPrime Minister, Hon. E. A. Ransom, was asked by the union to approach the banks with the idea of having the imposition removed. To this request Mr. Ransom replied In reply I have to say that the Government is of opinion that the banks might well have refrained from imposing additional charges upon the community during the present period of economic depression; but at the same time the matter is entirely one between the banks and their customers, and it is felt that the Government could not directly interfere. Following this the Acting Prime-Min-ister wns asked to reconsider the matter. In a further reply to the union, Mr. Ransom said :—- I have to say that the banks made no secret of the fact that the charge for keeping accounts was increased to offset the increased taxation which the banks were called upon to bear as a result of the Budget for the current year. In this connection you will recollect that the Government. in preparing the Budget, was faced with a prospective deficit of £3.000.000. and there was no alternative but to call upon' all sections of the community to assist tn making good the shortage. Under these circumstances, as already stated, it is considered that the banks might well have refrained from imposing additional charges on the community. At the same time, whatever the purpose, the .matter is one between the banks and their customers. and the Government has no authority to interfere. Further, any representation from the Government would merely be met with a request for a reduction in taxation, and that is of course impossible, in view of the present financial position. As the New Zealand Farmers’ Union directly represents a large proportion of the banks’ customers, it is suggested that your representations should he addressed directly to the associated banks.