The Dominion FRIDAY, MARCH 15, 1940. THE ENCOURAGEMENT OF THRIFT AND SAVING

Dominion, Volume 33, Issue 146, 15 March 1940, Page 8

The Dominion FRIDAY, MARCH 15, 1940. THE ENCOURAGEMENT OF THRIFT AND SAVING

It is of importance to note that for the first time since August, 19.38, tlie Post Office Savings Bank returns for January last show an excess of deposits over withdrawals. The amount, £150,153, was. not large but it is satisfactory to find that the downward trend in savings has been checked. After a period of substantial increases in deposits a change set in about the middle of the 1938-39 financial year, and an excess of deposits over withdrawals of £3,412,008 in the year ende March, 1938, was followed in the succeeding year.by an excess of withdrawals amounting to £4,163,417. This depletion of the funds continued till December last, when the excess of withdrawals for tne nine months was over 44 millions. Thus in 16 months withdrawals exceeded deposits by nearly £9,000,000.

These are very large and disquieting figures. Various reasons have been given to account for the extent, to which depositors have drawn on their savings; but it must be evident that over the penod mentioned a large proportion of the people concerned have either been spending more freely from necessity or in extravagance. Nd doubt some have used the money in various forms of investment of lasting value. It is significant, however, that in addition to the withdrawals of savings being exceptionally heavy, there has been a falling-off in fresh deposits. In the financial year ended March, 1938, the deposits totalled £33,041,082, whereas in 1939 they dropped to £30,434,291. In the nine months since then to December last, the rail in deposits was still heavier. The returns show that from March to December, 1938, the deposits were £23,780,532, while from March to December, 1939, they totalled only 991,538, a drop of nearly five million pounds. The improvement shown in the January figures therefore must be regarded as a wholesome sign. It is unfortunate that in i ecent years there has been a distinct tendency to discourage thrift and saving. It is not only that a policy of spending has been advocated to extreme lengths, but savings have been more heavily taxed than earnings. It was only a few days ago that the Minister of Finance went out of his way to defend the penal taxation on what are termed unearned incomes. This is all wrong. The soundness of our economic and financial condition, and the general development and advancement of the country, depend in a large measure on the thrift and saving of the people. In this Dominion, for example, by far the greater part of our industrial and commercial development has resulted from the investment of the savings of the people in joint stock companies. J. he combined savings of groups of shareholders have provided the capital which otherwise would not have been available for the starting of fresh industries, and the expansion of others; and the whole community has benefited. Yet those who have invested their savings in this way are singled out for penal taxation. A new outlook is badly needed. Instead of discouragement every effort should be made to find practical means of encouraging the people wherever possible to set aside something regularly, however small the amount may be, against the possibilities of the future. Ihis does not mean a policy of skimping and starving; but a recognition of the unwisdom of unnecessary extravagance, and the advantage of having a reserve which may be turned to useful account at a time when it is most needed. Much has been done through the various classes of building societies to encourage thrift. Thousands of homes have been built in New Zealand in this way through small savings; and thousands more through the setting aside of modest amounts each week or each month till sufficient has been accumulated to pay a deposit on a suitable property. This saving habit is a wholesome practice, creating as it does a comfortable feeling of independence and security against the minor ills of life and a safeguard against future misfortune.

In Britain today hundreds of thousands of people of all classes are setting aside small but regular weekly savings to assist by way of loans the war finance of the Mother Country. Something approaching £100,000,000 has already been provided in this way, and without any special hardship. This indicates what can be accomplished under the stress of emergency. The same thing could be done, possibly on a lesser scale, in normal times. It could be done here with advantage to the individual and to the nation, not as a war measure, but as a. sound and practical policy for all to follow. Any movement in this direction should be given the fullest possible encouragement, not only by placing savings and the income therefrom on a specially favoured footing so far as taxation is concerned, but also by providing varied schemes and forms of investment of savings which will be attractive to all classes.