LENDING RATES

Kaikoura Star, Volume LIV, Issue 50, 28 June 1934, Page 4

LENDING RATES

BANKS IN DEFENCE.

Many interesting aspects of banking were dealt with by the vice chairman of the board of directors of the National Bank of Australasia (Sir Frank Clarke) at the annual meeting in Melbourne. On the controversial question of t( releasing credits’’ Sir Frank Clarke pointed out that in the abi.encc of a wider buying demand necessitating an expansion of productive industry the only way the banks could further extend credit would be by reducing the margin of security to an unsound extent, or by lending for unproductive purposes, and he was emphatic that the bank would take neither of thesecourses. It is a mistake to consider that lending rates of interest by banks are the most important factor in the development of industry, but at the same time Sir Frank Clarke declared that these rates are now as low as they have ever been in modern times, and he contended that they would not deter anyone from extending sound operations. In paying a well-merited compliment to hard-working primary producers, Sir Frank Clarke directed attention to the fact that in the last three years the National Bank had no record of having taken proceedings to evict any A’ictorian farmer, and that in less than a dozen cases had it been obliged to enter into possession of abandoned properties.

“It has always been the considered policy of the banks,’’ he said, “to keep entirely apart from politics, but their seems to he an increasing and regrettable tendency on the part of politicians to drag them in. It can only be said that this is to your directors a most unwise development, and that the system which alike in England and Australia has kept the finances sound in a time of unexampled stress should not be altered by inexperienced men without very much greater cause than any which has up to now been put forward. ’ ’

Sir F»ank also said that any downward movement of the exchange rate would be necessarily slow. If Australia’s oversea accumulation became unduly heavy the situation would tend to correct itself of its own weight. Meanwhile primary producers were anxious that there should be no reduction from the £125 rate without due cause.