The Banks Suffered Too!

Manawatu Times, Volume 62, Issue 4, 6 January 1937, Page 6

The Banks Suffered Too!

It is truly remarkable how beliefs can gain currency when they are absolutely contrary to fact. Banking profits during the depression years provide a perfect example. During the years 1932-34 in particular there was an almost universal belief throughout Australasia that the banks were unique in not suffering from the prevailing depression. Due to the influence of this belief, which was held by most people, whatever their trade, profession or station in life, the banks became distinctly unpopular. Currency theories gained very great vogue. Some advocates of currency and of credit reform even went as far as to claim that banks deliberately induced depressions. In the light of our own recent history it is of considerable interest to examine the records of the banking profits during those lean years. There has just been published by the Australasian Insurance and Banking Record a summary of bank profits for the past quarter century. The record covers the eleven trading banks operating in Australia and New Zealand. For the five years before the depression, 1926-30, the aggregate profits of these eleven banks averaged £6,260,000 yearly. Then came the crash, and the banks suffered too i During the ensuing five years, 1931-35, the profits averaged £2,980,000 yearly. In other words banking profits dropped by no less than 52 per cent. During those years profits were less than during the pre-war years of 1912-14—this despite the responsibility and risk of carrying almost twice the amount of deposits that were carried in pre-war days. That banking and credit practices are capable of improvement is a safe presumption. No human device is perfect. But there is required a true knowledge of the state which it is proposed to remedy before any attempt is made toward improvement, “less meddling leave the situation worse confounded.”