WELLINGTON NEWS

Hokitika Guardian, 12 July 1928, Page 4

WELLINGTON NEWS

OVERDRAFTS, INTEREST, LOANS, ETC. ' (Special to “ Guardian.”) WELLINGTON, July 9. The last session of Parliament appears to have developed quite a number of experts in high finance and banking and the Labour Party seems to have tho monopoly of these experts. A Labour member can talk the most arrant nonsense about finance and banking and get away with it, because those who elect him have no knowledge of these subjects, and arc more impressed with the member’s ability to heckle the other side rather than with his ability as a financier. Several members in their Address-in-Replv speeches dealt with financial matters, and it is singular that most if not all tho speakers adopted the baby game of throwing mud at the Associated Banks. It seems that some members are obsessed with the idea that the Associated Banks, are associated to exploit public, and that it is wrong for the banks to combine in this manner. We have the proposed new bank for which a charter is being sought by medium of a private member. One cardinal feature of this proposed new bank is tliqt its articles will contain a clause prohibiting it from becoming a member of the Associated Banks, which is a slur on the banks as it implies that the association exists for unfair purposes. Bankers must work in association for their daily transactions are interwovep and bring them together. In England there is the Clearing House, which, ip effect, is an association of hanks for ordered business. In America therp are the twelve Federal Reserve Banks established by law, and an outside hank to enjoy such facilities as the Federal Reserve Bank provides mqst become what is known us a member bank. Not long ago the Governor of tho Bank of England, the Governors of the Reiehsbank and the Bank of France met in Washington officials of the Federal Reserve Bank and are believed to have discussed ways and nieans; not to exploit the public but to help in the stabilisation of European currencies. If it is permissible to have committees or councils to control meat, dairy produce, fruit and honey, if it is right for. workers to form unions with their iron discipline and vicious ethics, if employers can form associations and lawyers, doctors, merchants and others can form associations and societies, what can lie urged against banks forming associations. Co-operation in business is not merely desirable, and the suggestion that the. proposed bank js not to become a member of the Associated Banks is just political froth. The banks are not likely to offer the slightest objection to the proposed new bank, tho idea for which is said, to have originated in a country town in the North Island. The London and New Zealand Bank, Ltd., when it does begin operations in New Zealand, it it ever does so, will find that it lias a very hard row to hoe. There is a science and a technique in keeping a hank sound, but the idea of the man in tho street is that any average man can run a bank. In the Legislative C oimcil a speaker stated that there was room for another private bank in New Zealand, and bo hoped that the new institution would not be connected with the Associated Banks and that it would adopt the principle of giving its customers the benefit of interest on daily current account balances, varying from 2to 2} per cent. The suggestion that 1 the banks should allow interest on current account is made periodically both here and in Australia, but the banks have not found the suggestion acceptable, not even the Primary Producers’ Bank which was formed in Australia three or four years ago, nor yet by the Commonwealth Bank. To allow inter-1 est on currept necount balances the bank must be able to find suitable investments such as day-to-day loans and otner similar short term investments which are not to be found in New Zealand. The banks cannot manufacture interest, but they must earn it with the funds at their disposal, and there are no investments of the kind to be found say ill London. Lombard Street is always wanting short loans, and each morning bill-brokers visit the banks with which they do business and ascertain bow much they can borrow for the day or for the week. All kinds of efforts are being made to force the banks to reduce the overdraft rates, but none of the members seem anxious to bring down rents, or to compel manpffipiuvpi's to reduce the price of goods py qyiionists to accept lower wages. To reduce the price of money is to raise the price of commodities and services. i