BANKS AND PUBLIC

Evening Post, Volume CXI, Issue 121, 25 May 1931, Page 12

BANKS AND PUBLIC

'A TIME TO SPEAK

DEPOSIT AND OVERDRAFT

"Evening Post," 25tK May. Heads of big British banking institutions are conspicuous for their reticence, especially in availing themselves of the "broadcasting" facilities of the newspapers. Their critics, on the other hand, are generally only too ready to do so. Banks' customers, however, may be familiar with the polite little notes from their bank managers to call upon him "at your convenience," and he is a dull man who cannot tell beforehand what the nature of that invitation portends. Such meetings are generally characterised by the courtesy of the banker, but always by plain speaking. Otherwise the banker is as slow to speak as he is: swift to hear; in fact, he is trained to; hold his tongue. Critics may rail at the banks and say pretty well what they please about him, but ordinarily the attitude of the banks is expressed in the modernised version of an inscription on the ancient Marschall College in Aberdeen: They say. What say they ? Let them say. Political events in Australia, however, have compelled bankers to speak their minds, express their views, to utter warnings; and they have done so with a clearness and candour that has commanded respect1 and made people think. Sir Robert Gibsony chairman of the Commonwealth Bank, certainly did not seek the ■wide publicity that his important statements obtained when he wns recently called • - before the Federal Senate. At the same time, the questions put to him received such answers as fully confirmed the views already expressed and the warnings uttered by the heads of Australian banks and kindred institutions. Sir Robert was most emphatic when he warned the Senate that "a serious departure from the present financial system must militate against the nation"; and for his' straightforward answers to questions .put to him —many of them most difficult to answer wisely and without trespassing beyond his office—he was thanked by the Senate in the following terms:— "You'have enlightened the members on both sides of the House. ' You have displayed a devotion to duty which cannot be too much' admired. We feel deeply indebted to you for the advice and the opinions you have expressed." .... BANKS AND CREDIT. Although the relations of the Commonwealth Government and the Commonwealth Bank only were the subject of interrogatories when Sir Robert Gibson was summoned before the Senate, yet his answers did much to enlighten the public on matters of which they were necessarily only-partially and not always accurately informed. Heads of other banks, however, have found it necessary to abandon their conventional silence and speak openly on certain phases of banking business which are the frequent subject of hostile and ill-informed criticism. .... One cry frequently raised in Australia and sometimes heard in more than a whisper in. New Zealand is to the effect that the 'banks are deliberately. pursuing a policy of deflation. It is in the endeavour to refute such statements that tne Associated Banks of Australia have issued a statement to prove the contrary. Jhis statement opens:—"ln order to test tie assertion of certain unions that the banks were unnecessarily contracting credit and were dictating the financial policy of enterprise in the direction of. forcing reduced wages, the Federal Arbitration Court secured'from the-Commonwealth Statistician an analysis of banking statistics between 1914 and 1930." , The analysis referred to was taken irom a judgment delivered by Chief Justice iDethridge in the Commonwealth Arbitration Court on 22nd January last. TESTING AN ARGUMENT. It is not "fresh," in the news sense of the word. But it is thought desirable bythe banks that it should have a wider publicity than Court judgments usually re"lt was submitted (stated the judgment) that the banks,, notwithstanding the prosperous run they have had since the war, were unnecessarily contracting credit, and were dictating the financial policy of enterprise, all in the: direction of forcing reduction of wages." The analysis was obtained from the Government Statistician in order to test this argument. It is in tabular form, but is rather too .full to be published in this . column in extenso, but the following figures will serve to support the statement of the1 banks that they are meeting the requirements of their customers to the utmost of their resources, which are fixed deposits and current accounts, or moneys lent by the public to the banks, and advances ; and bills discounted, which are moneys lent by the banks in their turn to the public. The average figures, ■with those of 1914, are those for the past five years:— ■•;■•• - . ' P.c. of Advances Advances. Deposits, to dep. £ £ 3? 11 114,337,465 157,069,480 72.79 1926 213,252,020 264,792,151 50.54 1D27 236,136,717 270,211,853 87.39 3028 240,677,748 289,535,632 83.13 1929 267,831,631 302,274,716 88.61 1930 284,283,139 285,194,939 99.68 The Australian comparison includes Government and municipal securities, and shows the percentage of. advances _to de.posits to have increased approximately-fronv'-72 per cent, to 105' per cent. "It will-thus be shown," states the circular, "that, during. recent years, particularly the last two years, there has been no undue contraction of credits by the banks. On. the contrary, from 1920 to 1930 percentages largely increased." ;.'■; IN NEW ZEALAND. •The under-mentioned figures relating to business of the six banks in New Zealand have been compiled on similar lines to those of the banks in Australia, and have been calculated to 31st December of each year. They represent an average of the figures submitted to the Government and jjublished in the Press each quarter. ■"'.. Percentage advances to Advances. Deposits, deposits. Tear. ' £ £ 1021 50,607,539 44,262,025 114.34 IS2B 46,179,462 51,7f10,7]2 89.16 1929 49,278,1(13 55,080,686 89.46 . 1930 53,637,397 52,918,778 101.40 ■ Note.—The advances include bills discounted; the percentage of advances to deposits docs not include Government deposits. The fixed deposits, however, include relatively large sums held in New Zealand on short terms, and are the earnings of overseas companies which are disinclined with the present high rates of exchange to make remittances to London. But an important point to be noticed is that such fixed deposits are for short terms and liable to be greatly reduced so soon as there is an improvement in the exchange New Zealand on London, enabling substantial remissions to be made and depleting the lending resources of the banks for New Zcalrvnd industrial and commercial requirements.