THE H.B. TRIBUNE TUESDAY, DECEMBER 2, 1930 A BANKER SPEAKS

Hawke's Bay Tribune, Volume XX, Issue 295, 2 December 1930, Page 4

THE H.B. TRIBUNE TUESDAY, DECEMBER 2, 1930 A BANKER SPEAKS

There has been no hesitation about affording space in this issue to publish, practically in full, the address which the chairman of the Bank of New South Wales delivered at last week’s annual meeting of shareholders. It is, of course, primarily based on Australian conditions and directed to an Australian audience. But there is so much in our present troubles and immediate prospects that the Dominion holds in common with tho Commonwealth that most of the comment and criticism made are pertinent to both countries. Beyond this, as the concluding passage of the address shows, the Bank’s operations in the Dominion form a very substantial proportion of its general business, and represent also a very substantial part of the total accommodation afforded by financial institutions over here. There is thus every good reason why we in New Zealand should pay serious heed to what so well informed an authority has to say, by way both of explanation and of advice. In the first place, it should be recognised that we are singularly fortunate in being thus served by old-established banking concerns that have deservedly earned the complete confidence of the people. Never is there the faintest whisper of doubt about their stability, and this means that, in addition to their own big subscribed and accumulated capital, they are entrusted with an immense aggregate of other folks’ money with which thev are enabled both to promote prosperity and to help in adversity. This reputation has been built up and maintained, over long years with many vicissitudes, only by careful and cautious management and is in reality one of the finest and most beneficial assets that our banks have got. At times this policy has not met with approval from the more adventurous and speculative spirits seeking assistance. But in days like these it proves itself to be the only one that can he pursued with safety and with ultimate advantage to the community. It forms a striking contrast with, for instance, the conduct of the banking concerns in the United States which, during the last few weeks, have come tumbling down directly the pressure of hard times is applied. At tho present moment our banks are stretching the means at command to their utmost limit

in order to meet the urgent demands made upon them, and this is a point which impatient and importunate customers must realise.. Then, too, as Mr. Buckland indicates, it is essential that resources should be conserved as much as possible in order that the quickest and fullest advantage may be taken of the turn of the tide when it comes.

Of particular interest to us in New Zealand, as to our Australian neighbours, is what is said about the “unsound schemes of public finance advocated in some quarters and the persistence with which Governments are leaning upon the banks to finance policies and commitments already responsible for the severity of the local recession.” It may be that with us the governmental calls upon the banks themselves have not been as great as in Australia. But much the same effect has been produced by heavy borrowings on the local money market at relatively high rates of interest. Thus, as Mr. Buckland puts it, “their insistent demands for credit have absorbed funds that should have been held in readiness to aid, at lower interest charges, the revival of enterprise when prices turn for the better and confidence returns." When we remember that the great bulk of the money thus borrowed has been and is still being spent in directions that promise no adequate return, indeed, in some cases impose an additional burden of taxation, we can see how seriously an improvident Government retards the return of sound prosperity. The address does well to direct special attention to the fact that production for export is almost everywhere in the Dominions being conducted at a monetary loss to the producers. This fact is specially obvious to all in our own country at the present moment, when we see a year’s growth of wool going at prices that scarcely pay for getting it off the sheep’s hacks and preparing it for and sending it to market. It is equally manifest that unless prices go up substantially or cost of production is brought down, then the volume of output must necessarily contract, instead of expanding, and the national income upon which all the people virtually live must be still further reduced. It is here that we have> aptly quoted for us what an Australian writer has said on this point. “The sole source of all expenditure, both public and private, and of all saving, is the National Income. Food, clothing, shelter, education, amusements, necessities, comforts, luxuries, everything which is ’consumed’ (in the widest sense of the word) must come from this one source alone. From this, too, all (he vast expenditure of Governments must be met.” The people of this country must understand that unless this basic fact is realised and acted upon, the seeming benevolence of a wouldbe fairy god-motherly Government will nrove nothing but an eventual curse.