BANKING CHARGES

Evening Post, Volume CV, Issue 121, 24 May 1928, Page 10

BANKING CHARGES

. (To the Editor.) Sir,—Can you explain, through ihe columns of your valuable journal, why the Bank of New Zealand charges its customers 10s a year for keeping their current accounts? Is it a fact that current account deposits are' a' valuable source of revenue to the bank, the bulk of the aggregate credits lying at call in 'every branch of the bank being utilised as a fund out of which short-dated advances are made to business men and others, chiefly by way. of overdrafts, at a high rate per cent,? 'If this is the case, then. why. should 'the depositors not participate in the I profits' instead of being stung for 10s every year to still further swell the bank's revenue? Many people would like also to know .who derives the bank's profits arising from. the institutions. paper issue in excess :of its gold cover. The security for this excess issue is really nothing more than the public and private Wealth of the community. Why, then, should not the community, in this case also, participate in the profits It is no wonder the Bank of New Zealand is a wealthy institution, that it makes enormous annual profits, and that Bank of A Tew Zealand shares . ar,e worth probably twenty or. thirty times their -original cost. - It would be interest' ing and instructive to know precisely what effect the policy of the various banks of issue operating in this country has on economic conditions generally, and how it reacts on thousands of manual workers who bring up families and pay their way on £4 to £5-10 a a week. I understand that the-Bank of England pays £180,000 a year to the State for the right of paper issue, and it is interesting to note that the new British Currency Bill provides for the amalgamation of Treasury currency notes, with Bank of England notes, and that the whole of the .profits .of.- the new £1 and 10s notes, together' with the £5 note issue of the' bank, 'is to go lo the State. Evidently it is recognised in Britain that, the security of the Treasury currency is the private and public wealth of the State, .and not. gold, and if the course to be adopted . by, .the Bank of England is dictated,by considerations of commercial morality, why should the same ; course not be ..adopted in this Dominion? —I am, etc., ■•" i -. ■ : W.T. MORPETH. Hokitika, 21st May.'[The correspondent appears'to have'over-., looked the fact that the- Bank of New Zealand is not singularin making acharge of 10s per annum for. keeping accounts. ■The banks are subject to a direct tax on their note issue, of 3 per cent., plus 13s 6d per cent, income tax. The note issue is a first charge on ■ alt the assets of the Bank of New Zealand, and is specifically secured on coin to one-third of the amount of the notes in circulation, and the balance by. the. bank's securities in New Zealand, Great Britain, Australia, and elsewhere. The statutory statement of the average liabilities and assets of the Bank ol . S7 z zealand_ ealand for the quarter ending 31st March last, showed, notes in circulation £-3,539,135, against which were metallic reserves £3,486,867, and-Govern-ment securities £3,074,697, furnishm* ample cover for the ndte issue. Bank notes are legal tender in. New Zealand, btatutory returns of the. Bank of New Zealand as published in New Zealand relate solely to the business of the institution in this Dominion.—Ed.]