The Chronicle LEVIN. SATURDAY, AUGUST 18, 1917. N.Z. GOVERNMENT POST OFFICE SAVINGS BANK.

Horowhenua Chronicle, 18 August 1917, Page 2

The Chronicle LEVIN. SATURDAY, AUGUST 18, 1917. N.Z. GOVERNMENT POST OFFICE SAVINGS BANK.

Almost everyone lias -small or large interest in the Government Post Oifico Savings Bank. It is a national institution which proves its-elf to be of mutual advantage to the people and the State. It gives splendid facilities to the private citizen and also to the man in a small way of business whose transactions do not involve the need for liquidation of liabilities at daily demand nor at intervals of less than three days. The extent of the accommodation that the Swings Bank affords to customers is represented by the amount of their deposits; but the advantages given in otho rrcspects are remarkable. 'No private bank doing ordinary commercial business could atj ford to give a customer the use of his ■ own money (at three days' call) and ! also pay him interest at the relatively , big rate of to 3:1 per cent per an- | nuin on the monthly balance. The private commercial concern gives its I customers accommodation and advances that help the business life of a town by facilitating work and development of industry; and to this extent they fill a want that the Savings Bank cannot cater for. Both classes of banks have their separate avenues of helpfulness. The private institution derives the bulk of its income from the o or <i per cent, per annum that it charges for accommodation. The State institution has no such source of income. The explanation of how it contrives to bo profitable is given— or, rather .adumbrated, for the detail is not complete—it is to be found in the pages of one o those allegedly "dryasdust Parliamentary papers" from which the average person turns away away finite uninterested ; we refer to Parliamentary Paper Fo. which was laid 011 the Talile of the House of Representatives last month Tjy the Postmaster-General of New Zealand. This paper makes it abundantly clear that the saved shillings of the Now

Zealand communities total nn immense amount; and that in borrowing these from the Government Savings Bank the Government raises money for the State more cheaply than the outside Governments have been able to do; and in some cases at lesser rate than it lias had to pav in the open market. There has been a disposition in past years—amiongst Parliamentarisms —to complain that the Government borrows tin) cheaply from its own institution ; but The Chronicle cannot agree with this_ contention, in the light of the remunerative interest that the depositors receive for money deposited oil terms a'most equal to being "at call." An analytic .survey of Parliamentary Paper I*s will repay any curious investigator. Tlio paper shows that, the New Zealand Government's borrowings from the bank all have been made at par or at a s'ifrlit premium in favor of the borrower; except in a notable instance wherein Inscribed Stock of a nominal value of 1,2.260,495 lis Id was secured by the bank at a cost price of iL2,244,582 '18s : a gain of nearly iLIG.OOO for the bank (additional to interest) by rlav of redemption. This transaction in the hank's favor is explained by the interest rate of 3 per cent, per annum; a parcel of L 618,000 of Inscribed Stock at 3J per cent, per annum was placed at par. Several millions sterling of the bank's funds invented between 1900 and 1914 in New Zealand Government loans at 31 per cent, 3J per cent and 4 per cent respectively were placed at par in every instance. finch odd sums of moneyi as the Savings Bank has been able to invest in securities outside of Xew Zealand—our own Government always has first call on the institution surplus funds- have been placed to great advantage. Investment of L (800 in Canadian Government 3 per cents.

•■ecnred Ihe bank a face value of five thousand pounds sterling; and. again, by -accepting the low Interest rate of 2 per cent, the hank sceured at. a- cost

'F 1.10,132 8s Dd Canadian stock of a face value of L 12.666 15s 11 J. For Settlers debentures (1908) the bank paid LG4 10s premium to obtain ,r 12,!;00 face value, though for two exactly similar securities, raised in the sarno year, it gave no premium. It is specially noteworthy that in only fourteen instances out of 1(30 investments—aggregating in value L 20,196,"00.—did the bank's transactions occur ■other than at par on either side. An unusual investment by the bank is a modest LB9 15s cash to secure a face value of L'loo bearing interest at 2J per cent. In South Australian Stock two sums are invested, carrying profitable premiums: L 12,000 at 3J per cent which cost the bank L 11,760 in cash,

and a sum of £1772 IGs 2d, with 4 per cent, interest, for which Llß6l 9s was paid. An investment which seems on first sight to be the bank's most profitable and safe investment is a parcel of Victorian 3 per cent, stock, face value £12.379 19s lOd, obtained at an outlay of £10.708 13s 10d. Cape of Good Hop? (3J per cent) Consolidated valued at £200 stands to the bank's credit for an outlay of £186 Is 3d; India Stock at 3J per cent nominally worth £216 lis 3d was obtained for £213 ISs 9d, and India Stock at 3 per (•(•nt yields a nominal of Co 2 1,3s 9d for £45 15s. A sum of £26,865 is invested in Xew South Wales 3-V per cent .stock of a nominal value of £27,T00. A few Xew Zealand local bodies have had Savings Hanks investments made in their debentures: notably the Greyinouth Harbor Board. £260.000 at par at 4 per cent; Hamilton Borough Council. £3000 at par at per cent; Wellington Harbor Bnatd £27,500 at 41 per cent and £50.000 at 4 per cent: and Wellington City Corporation £125,000 at 4 per cent. Tt is specially noteworthy that the bank gave but £123,'500 for the Wellington Corporation debenture but -all the other local body debentures were obtained at par, including a sum of £489,500 placed in Westport Harbor debentures at 4 per cent. ''Even Homer nods."

As a bare record, the PaiflSaimientary Paper we have been summarizing is exceedingly interesting, but it would be much more informia.ti've if it contained an analytical table of intcrost' yield's. If any curious reader amongst the Chronicle's sub-

scribers would care to make the analysis we would bo happy to lend him the paper. For our own part time will not allow, ill these days of half-staffs and extra duties. The eC2'"),()03.,208 of deposits in the bank would ab'sorl) (roughly) I£l ,889,130 per annum in interest charges at 32 per cent. What the Parliamentary paper does not show is the aggregate earning power of the Savings Bank

investments. If this were shown, the public could ascertain with very little trouble, what indirect cost (if

any) the Government- is put to as offset to the great advantages it derives, as a borrower, from handling the savings of the rank and file of the general public; who. per contra, are afforded a thoroughly safe and reasonably profitable and wholly convenient channnel wherein to invest their temporary superfluousi . moneys.