DOING THEIR BIT

Evening Post, Volume CXV, Issue 139, 15 June 1933, Page 12

DOING THEIR BIT

NEW ZEALAND'S BANKS

REWARD OF SOUND POLICY

ADDRESS BY ME. GROSE

"The banks in New Zealand are continuing to do their utmost in assisting tho Government and tho country generally," said Mr. J. T. Grose, chairman of the Associated Banks, at the annual social function of the New Zealand Bank Officers' Guild last night.

"They have afforded and offered the Government assistance on exceptionally generous lines, despite the inequitable taxation -which is imposed on them," he said. "It is but just to state hero that the Government has ?, recently passed legislation permitting the banks to deduct from their taxable income bad debts actually written off, a relief long sought aud hitherto denied, though it has always been enjoyed by other trading companies. It is hoped that further legislation will be passed to put the banks on the same footing for income tax purposes as other trading companies, so that a, bank's taxablo income will be its actual income and not an arbitrarily arrived at fictitious income, as is tho case at present.

"The banks also continue to assist the commercial, industrial, find particularly the farming and pastoral life of tho Dominion as far as is consistent with sound finance, and it is largely when finance is unsound or ill-conceived that seeds of future financial trouble are planted, whether by private or-pub-lic borrowing or lending. And I may add here that a too complaisant bank manager is a dangerous person. FALL IN ADVANCES. '' As an indication, of how the depression has restricted banking business and business generally," Mr. Grose continued, "I may mention that as compared with three years ago bank advances have fallen by about £8,000,000; that is without taking into account Government finance, which does not come under the heading of the advances. Bank deposits have decreased by over £1,000,000, the increase 'in fixed deposits, however, being about £0,000,000. "It might seem on the face of it that the banks are drawing into their shells—but that is not the case. The banks are as anxious as ever to afford as much assistance as they have it in their power to afford." To illustrate this point, Mr. Grose quoted the chairman of the Bank of Adelaide, who said that a strong contrast between the increases in deposits and advances was sometimes criticised as an indication of the banks' reluctance to make new advances, and of a policy of calling in old ones. So far as tho Bank of Adelaido was concerned, the .figures were merely evidence of restricted opportunity for profitable and safe employment of funds in industry arid trade. The opportunity of making suitable advances would be welcomed, but first and foremost the duty to depositors to repay their funds on demand or when due had to be borne in mind. '' That statement is correct beyond doubt," continued Mr. Grose, "and it is applied to New Zealand as well as to Australia generally. CARE AND FORESIGHT. "That tho banks of this country have not flinched or faltered in these •unprecedented times is due to their prudent and careful trading, and foresight in times of prosperity. The banks of most countries, and among them the banks in New Zealand, have learnt bylong experience that they must in good times build up their reserves to carry, them —and the country in which they trade —safely through lean years..That such a policy is sound hardly anyone would deny in the abstract. It is the practical carrying-out, of the policy which seems to arouse tho unthinking criticism of many people. - "To appreciate how much needless suffering and hardship to individuals, and how much dislocation of finance is caused by an insufficient regard of the principles of safe banking, one has only to consider tho recent banking debacle in the United States." ' ■

'Since they had last met, another year of unrelenting depression had. passed^ and they were now in the middle of the fourth year, but he still firmly believed there.' was no reason to become disheartened or lose hope. "MERETRICIOUS SCHEMES." "They in New Zealand wero not in a position to play any great part in questions of magnitude, but they must live within the national income, the 'real purchasing power of which had been narrowod^by forces beyond their control. Tho people must keep their heads. Chaotic conditions such as wero being experienced, were bound to produce a crop of unsound and meretricious schemes and would-be palliatives, and it was perhaps only natural that people weighted with adversity and weary with cave were only too eager to clutch at straws; but they would be well advised to leave su&h things alone.

"Tinkering with currency has never saved, any country, but has brought many into trouble," said Mr. Groso, "and devices for dealing in credit- on anything but sound aud tested business lines are likely to do incalculable mischief. ''