THE MONEY POWER CONDESCENDS

Maoriland Worker, Volume 12, Issue 301, 6 December 1922, Page 7

THE MONEY POWER CONDESCENDS

Finance Honarchs Reply to '" later. '/'

Arid ..Get Slogged

The N.Z. Labour Party. candidates ia Wellington Issued" two leaflets iv the constituencies —one "A Colossal Bribe," dealing with income tax reductions to banks,"- insurance companies, etc., and the other, •■Who G-ets the Spoils?" dealing with .insurance company finance in accordance with articles recently • appearing in Tlie Maoriland Workor. ■ For the first, time in the history of New Zealand the Tsars of the world of High Finance condescended to takenotice of the criticisms of the Labour '.Party. They 'sufficiently, but '•reluctantly" unbended to make a- defence of themselves, their dividends.;, and the income tax reduction their friend Mr. Massey has so benevolently legislated for them. : In the Wellington "Evening Post of 2S/11/22 their . apologin appears, and it reads thus: — From inquiries made hy the "l'osr : to-day it was ascertained that neither -ihe banks nor the insurance companies were inclined to take any steps to correct the statements made in th? leaflets under consideration. ' It was thought that the figures quoted an-1 tha statements made therein carried their own refutation. It was recognised, however, that some people were not likely to be qualifier? to analyse the statements and figures made iv the- leaflets and to. discern truth froni error, glaringly apparent, as they were, obvious, too, it was . held, -lo those who compiled the lea/kits-with the object of throwing dust in ihe eyes of the people Into whose hands they would come. The chairman of the Associated Banks,- JVir. HenryBuckleton, said the rebate to the banks was nothing like so large a.' , . Mr. Holland, M-P-, has stated", iio'r "as the leaflet in review stated. "The banks will derive no real advantage," lie stated, "from the rebate on 'suparineomes'—the expression used in the leaflet. The banks are passing on to the public the advantage they will receive in the form' of lower interests on overdrafts. The intorUJon of the hanks io do this has already been; -made public property. Ivlr. Holland should know it, as everyone else knows -it." THE STATE BANK IDEAL. I "I notice," Mr. Buckleton continued, "that a statement wag made by a Labour candidate, speaking in the

South Island, that the Commonwealth Bank. ■•of Australia bad reduced the rate- of interest on overdrafts. This is a sample of the misstatements that the public are asked to digest, and many people who know nothing to the eon- : trary do digest. That statement was < ' utterlj 7 false. Any candidate could : have ascertained the fact for hlmseir ; if he really wanted to tell the truth., : This is the truth: While the Common- | < Wealth Bank was charging 6 per cent, i —.which it has clone since its inception- -the. banks of New Zealand were 1 charging only 5h per cent., and,that ] was' the rate until two and a half ; years ago. Responsible .Labour lead- ] ers know this, and if they do not, it is 3 their business, to find out. before they 1 make such* misleading statements' to li people who, in many cases, have not ; the same opportunities as they have .; of finding out "the correctness or 3 otherwise of such assertions. It was j not until increased taxation came into ] force in New Zealand two and a half 1 ; years ago that the rate of overdraft i ! rates was raised. Nov/ that taxation Is ( | to be reduced, the rate is to be .like- j wise reduced. ] j TAXATION ARGUMENT. ] | "All the advocates of a State bank ] i for New Zealand point to the Common- % [wealth Bank; but the suppress the < 'fact that the Commonwealth Bank \ \ pays no taxation. They know very ] ; well that it docs not; but they do not j j tell their hearers that. If the banks 1 | in New Zealand were placed on the ' I Fame footing in regard to payment of j taxation as the Commonwealth Bank, •' then they could reduce tbe overdraft £ rate by less than the Commonwealth's t G per cent. Very good; supposing the t Government exempted the banks of c the Dominion from the payment of in- t come tax, remitted all taxation, where t would the revenue thus sacrificed c come from? It. would have to be made c good; you can rest assured of that. J Some one would have . to pay; the a money would have have to come from f someone. From whom?' How would t it be made up? By duties on tea, sugar, tobacco, beer,, entertainments. " Where would it come from? Let the workers who take all that the Labour speak- 1: ers say about the banks tell their I hearers'^where'..the. revenue now de- c rived from,.the banks would come'from"' 1 if there was a '''State haul-: conducted \ In New Zealand on the' lines of the c Commonwealth Bank, which pays no t taxation?" s t "A COLOSSAL BLUNDER." -- s Another banker remarked "A few- cl days ago Mr. P. Fraser, M.P., was very . £ scornful because a candidate had ad- f milled that he did not know much & about proportional representation.- £ Mr. Frascr's scorn should be turned c upon himself, for both he and Mr. ? Holland know very little (although x they say much) on the subject of tax- \ ation. The leaflet distributed by the t Holland Party headed 'A Colossal j 1

Bribe,* quotes the-.profits ,/bf .yaripusv joint stock companies ami other figures purporting to' show the. benefit; which such companies derive, from the recent reduction in income taxi The same figures have . been repeatedly quoted as correct by numbers of Holland Party candidates in their speeches. 'But the figures are not cor-' re.c't. Mr. Fraser and others have become alarmed lest the discrepancies may be discovered. "To get over their little difficulty they now describe the figures as 'approximately correct,' whereas, in actual fact, they are grossly inaccurate and totally unreliable. The leaflet quotes the profits of one bank,, the Union. Bsnk, as £536,261, and on'this figure iliey say that the bank obtains a reduction in,.income..tax of £39,325 16s. 2d.—worked right down to pence, you will notice.- Nov/ the only thing -Wrong with these figures is that till profit .quoted is the result of tliebank's•'whole.busines,' most of which. is outside Mew Zealand. It should be.; obvious to the simplest intelligence- < that a bank is not taxed in New Zea- j land on profits it makes in and London. The figures quoted for I the Bank.of New Zealand, National Bank, and two insurance.'companies . are also cju'tc wrong for similar reasons. Large as they are,, however, these inaccuracies are of little importance as compared with the colossal ignorance, of the" compilers of the leaflet. The profits quoted are tho! 'published" profits of the various com- I panics. Most people are aware the I •public profits' and 'taxable' income' j are two totally different things, but ' this fact does not appear to have pene- j tratcd the intelligences of the leaders! of extreme Labour when they allowed ! this leaflet to go forth. Then, again,! there are special provisions for cal-! dilating .the income tax of banking j companies (Land and Income. Tax! Act, 1916, section 94), and neither tho! actual profits made nor the public profit, in any way enters into the calculation. Truly, someone has-blundered!" -IXSL'BASCE PROFITS'..' -j Mr. O. R. Bendall, speaking on be- ! half of the insurance companies who j have been dealt with in a special lab- j our leaflet, took somewhat' the same j line as the banks as to the ignorance, j wilful or otherwise, displayed by th.3 , compilers of the statement "Who gets i the spoils?" Mr. Bendall said the\ statements were a wilful misrepresen- 'i tation of facts and figures in order to ; suit tbe Labour policy. They are ad- i dressed to workers, who constitute , sections of the community Interested \ equally with their co-citizens in -Insurance in all its branches; but who j are naturally not versed in comraer- j cial subjects, nor competent to form' an opinion for themselves on such i matters. -They would probably accept without criticism such statements as ! those made- by the.wrte.r of the leaf- j let. I think it is lamentable that con- -

Editions of the present niay parmit- Of r Such, unfair and scurrilous attacks 'upon a resijeetable section of the i trading community. s To : expose the misrepresentation aßdv irrelevancies: (It lias "been said -by. Labour speakers that "thb great bulk- of tile .paid-up capital per share has been derived frbiii r es erves—th & t • i s. - front profits undistributed as dividends and that in no.case does the capital actually paid up by the shareholders exceed the capital credited from reserves." Insurance business■.- is not similar to other businesses,' the profits of which can be definitely ascertained at the end of the financial year. Provision, which rio well-managed company can afford to disregard, has to be made for . conflagrations. In London, the provincial towns of England, within recent, times, millions, of pounds of value have been lost in 'eonfiagrations'—which is the term given by underwriters to abnormally largs losses involved ;in the destruction of znaiiy buildings. To take the most pro-' miuont examples of ■ recent tfnies— there are those of the Chicago !confiagration (19th October, * 1871), j£33;QOO,000; Boston (1873), £14,000,------000; Kingston (1882) £6;00C,000; Baltimore (1904), £10,000,000; and San Francisco (1906) £29,000,000—and many other less disastrous examples, which were paid for mainly by the large British insurance Companies, which had accumulated strong reserves out of profits, expressly for the purposes of meeting such contingencies. Many companies which had not been long in existence were ruined by the San Francisco conflagration. It is the imperative duty of every wellmanaged •Insurance Company to sup- J plement its paid-up capital with strong reserves from profits in good years, and this is a continuous process, because as the premium Income grows, so the reserve must be proportionately increased. - DISPOSAL OF RESERVES. . | When the amount of paid-up capital | and reserves show a satisfactory proportion to the premium income— usually one to one and a half times—■ it is quite., justifiable for a company., to allocate to its- shareholders a proportion of such profits. This in no wise reduces the strength of the company, and moreover it is only fair, as" it gives the earnings to the proper pai'tie.s to whom they are due, as wer? j they retained in reserve, they would ultimately pass to shareholders who might not have been on the proprie-tary-list when the profits were earned. "It has also been said that the p:>l-' ioy-hol<fers pay these companies eolos - sal dividends on a paid-up capital, two-thirds of which the polieyholders \ have themselves provided? The statement is somewhat ambiguous, as the policy holders have nothing to do. with the payment of the companies' dividend; what is meant is that the pre-.

! mlums, perd by the. polic-yholder, eulibles the company »».pay,a (Tivi,dend -' on a iKpJtal. of wr-ich two-thirds is ■ made up cr _ transfers from aecuinui latect prof f* ni past years. These fin- - j ancfai criij(,s have not made the most

of . their opportunities here,, as the ' figures of the seven companies quoted-* the proportion of reserve to oviginiijf paid-up capital is not two-thirds, -hut ' actually one and a half times (£ 4jj% originally paid; £10 ss. includingV transfers from reserves). The dividend - of an insurance company is tisually;. : ., paid per share; but it- may be.Wad& ; ,.". upon the paid-up capital, which, of 4 course, in the case of insurance com-, panics, includes■ transfers from re* .'.- serves in the same manner as obtains with all other commercial, concrns. If the Labour leaders -think this is wrong on the part of insurance companies, I would point ; out that .the holders of these shares prior to the transfers, undertook great liabilities, and that had a conflagration occurred, which used up the capital and reserves, they would have had to pay; up individually to the extent of ~theli* uncalled holding, therefore it is only: fair that in the favourable alterna-. tive, and after adequate provision, for reserve is made, the shareholder. should.be credited in his share account with the extra profit made. Surely, -it must be evident that, .this is ik> only fair to the individnalholder of shares, who cannot withdraw the money from the company, but also a wise provision by the directors for suring the sound, financial standing of the company to meet heavy and unexpected losses, such as. occurred at. San Francisco in 190 C. THUMPING DIVIDENDS. "The leaflet says that dvidends. t<s the original shareholders work out.at up to so much as 79 and 82.per .cent.. This conviction will occur only to the/ mind of the writer of his .leaflet and such as he. To compare present-day. dividends with original shareholders, is, of course, absurd. r£i-ft'ti-i frot; all 'of the companies quoted by tho critic are over half a century old, and there are probably no "original shareholders" left. The share list of insurance companies, like all other trading- companies, are continually chang-ing,'-but even if there-be '•a'ny s ;-ori§4n&t., '.-_■ shareholders" left, and obtaining today upon his original investment 79 or S2 per cent., it does not Alter the fact that the position is a perfectly just and fair one, as I have tried to show in my remarks above. On the present prices of investment, none o£ the local companies pays as much a£ 5 per cent, per annum, though the last dividend declared amounts, in one case, to as much a 5..16 per cent, on the paid-up capital; so obviously from the investor's point of view* shares in insurance companies in this Dominion cannot be as abnormally remunerative. The compan--

3es -c; noted 'in. the leaflet include Australian as well as New. Zealand, en en- ~ panies,..and ...the profits p:f these eo-m- ; : ■pa-nfie-s vhcive-'-inaihiy bees earned out-?. side -oi the Ifcwaitniem. pur fire rates ,' .are. ctrEsicei'.a.biy lower -lhan those ob- ! ' iaisin& .in Australia, .and competition ■- for business :is keener.. There is. one iEsurance company to l ' 75,000 inhabi-"-Sauls ks Australia, whilst in New Zealand, is one company for 35,000 only; in England, the. -. figures-are cine for every 420,000 of population. These figures should show that, in New Zealand there is no dearth - of -eexnyetiiicn, whilst as to rpte>i'" these .are the. outcome of. the combined experience for many years past of' the cojripanles operating in New Zoa--' itwd. # # « * Mr. : H 'lash's Reply ;■■■ ■-Ini ■ ifc-e B€'.vl, issue of "The Postj" Mr.' W. -Nash, Secretary of the New 2ca-,_ lane) Labour Party, made the following! reply:- -" ' .. - . ; The people of Nsv; -Zealand' are too deeply concerned w-'sh regard to the froanee of the country v.o accept tbe light dismissal by Mr. Buekleton cf. the figures set otft in the Labour Party's leaflet in connection with the'■profits oi -fa* foreign banking; corp-or--; ati-ons ra>w working in the Dominion* The slEtement by Mr. uuckleton"that "the banks der've no real ad---Vantage, because they are passing <m io in-e public the advEiita.ge they will receive in tllo form of lower interests:! on- overdrafts'" does not clear the matter up. The lower interest rates are Rot to -cense into' force until next year. The rebate on super incomes in on l ; --s-t year's returns. "Tho rebates to the banjes were nolike fco large as stated" says Mr.- Buekieton. Why not give 'ihs c"x- - Buckleton knows. try k mm aft . i xt c-: m.e#s, - T"i:e tacts w-.th regard to the vahaafiY the'' Gomoi-onw-e&Uli Basils- wiii-«pe-;k for. themselves. The rate of interest on -overdraft has mov-' «d 6 per cent. Docs Mr. EttckSot*yn exj-eet the .average- business man' to believe that up till "June, 1919, the New Zealand Banks were only charging 52 per cent, interest on '■ everrixiilfe? Be states: "New. .that the *ax£!?•■:• s is to be rechiced,- the rate I'-rto be reduced likewise." Does I hi:; me;?..n that «\ver.d.ra:t ra-.es are governed by taxation, and <hai oaJy to the extent ths.t~th>s banks. recv'".'-ci remission of ■.taxation-' will they reduce the overdraft rates? Does this mean That the business connnunity h.H-ve ■ v) continue to collect funds from .the public sufficient tfej allow at ibh/idfeiKiß from 10 per cent, to 2€>' per cent, for the banks-" shareholders? #.:s##ON"VvtfAJiT-B' ISANK Xslt • / ' ' Mi 003115 TAX. The ;reference to -the son-payment? ©1 income tax by the Commonwealth,: Bank reminds mc of an old Yorkshire couple. They used to taka si pint of beer .-every night.- An enterprising brewer's traveller induced them i a -lake a barrel. By ..so doing they saved 2d on every pint. At 8- • o'clock the night after the arrival' f>2 the barrel, the old chap went down-' ■to the cellar and drew off his pint,They suimcd together, ;?.nd when ike .pint v.:as r-mslied -the said:- : "Eh, lass., we/ye saved twopence to•night."' £he sakl, "Eh. men -w.e kave„'", Ai,*er mu&h Oogvtatmg* and, mouthl.?cking t-ite old chap, abovti. 9 o'clock, I'Mu'. -"E-h\ tass, let's .■s&v.e.- .another 'twopence." .-The reason the-GommorL-: vjealth .Bank does ..not pay tasaWctt.' is -that the 'State gets the lot. Tfteyci it! no need t<> spend sixpence on a; pint of beer to save twopence. The"' pro.ms junde by the Rank since its inception -(^4.379 : G0 , fi).-' if assessed' for income : tax at 11;*, highest rate ever in force, in Zealand .-(S/9 in the •£') w-ould -have: •yie-Idc-d .£-',&J.'6,075, which >YQul.d loare. ■£2,463..52ff for distribution io share-?. holders if-it-had been b;ink-- r ing -corporation, but in&tead. oi receiving the smaller amount t.he -people" ol: the Commonwealth received all ..iht. profits. ■conui nn buoe customs taxbhJ The stary of the duty on xea, srwsar,tobacco, beer, etc., is- too, -old. Tke :; •workers know that- -tlic-so iireins Jfixed alrcndy, but if the fcitate a bank -winch -was -g-lving a,a e<rual --vp-A turn io New Zealand that the Corn;.: Kionwealth' -g*w s '' tw Australia., • ■whole of ,; ihe ■ duty on tea. F-ug-.-'-~ ■tobacco, beer, and .s-nterta'^ninents ! could be remitted. ! 1 will not- trespass on your space to/ reply to n Another Banker," but ...it : ■would be interesting to kr-cw what is: • the difference 'between" "published'profits," ."public profits." and "real pfO'Sts'.' 9 • .'■ WOKK 'THA3T LABOUR £■».-' . Now v,x corno to the 'inrportsst part;! of th© statement —I he-special pro-J .yiaion m the Land and: 'income .iftel

H Adt./ip* Baulung 'companies, geet'on . 9,4,'". No. .$, "Land and Incoirn Tax ; 1916," .rerala: '"KotwJtbts:;.uiuLag a/ny- | filing to the contrary in this .ACi. p tfe©' . ineoiiie of a b-ank>r..£ j yhsTi 3n each year-be O.ecme'd u> %c* pi' &uiiJ. .equal t o ' thirty t^- ;- j^eye^-hundred pounds oS the joins'total tassets and liabilities- 'for ! j the JO'a'i' quarters of the-yea,!* -accord-' j-lig to Vafc sworn statements pubrisu-', eel in ILo Gazette as by J..£w/''j On rei:e:cc-nco to the '"Gazette," in. oGnr.ectio 11 \vith the Bank of New : 'Zteaiand, the following returns ■ . made.: . ' ' : puart€r SadGtS ■: Assets ' labilities ' \mn.- . . -■■■ ■■£■'' £ j■ -SOth JJunp. 33;585,445 ■ 35:210,619 : ]■ 30th Sept. 29,608,484 81,533,735 1' 30, h Dec. 29,233.587 26,59:5,331 1922— ' "" Slat March 30,550,812" Total Assets 12i,449 : 563 • 127,060,997 , ■ IyJa,lbsr''ties 127,060,657 - . ■ ■ ■Total Four •' : ■ ; Quarters 248,510,8*50 .Average 62,127,715 Aa?:.esy<.l:].e InAt SO./- per cent. 931,916 • , , At 7:/4 •Jα £ 341,702 ; 20 p-e-r cent. ' Super Tax „ . ..., ijow .remitted 68,340 : - TJie i&st-meniioned figure fs amend!-.j !'£<!! 'CD account of debenture int-erest, ! ■[-the amount of which \s not aseerlain- - able, lint taking the abov? figures us ; -coiTiSsi,. tile position is that Mie bank getfj a rebate o£. a- much larger >.u.i:\ ;hun :'« rnent'oneci in the ieafle! - . and -I like whole trutlL is "much jnoro daau- • ly" than the half-tru'h mcntirjr.cd in our leading article. The \v;.lh -.ax-gard to the Union Bank of A.us-ti-aiijT. \ver2 wrong chiefiy o-v/ing to the profit over the whole ci , .their bi'.s- !. mesH fcoing taken, ',ns:ead of tho Niv\v ...jZ-sai'-anct business onlj'. The actual , remission they receive is about i15,0C0. , Tho public would like answers io the following questions: . > (1) Was the rate of interest for o-yf-T-drafts in 1921-22 influenced by the amount payiable for income tax:? (2) the amount oC assessable for 1321-22 already known

d. r<-niit-T*g tlie I - vx [ J ■) ,i ucii f v the banfcs. El/>»CB PROFITS j Tick My. Beiulall suggests Vα t I - t -" < < r Zealand are "riot i ' -•* t o a,n ofsm on : {hem el*. ia on s.t;c*h ii.ciUe.-rs ' bo 1 v\-> '-r 5 v y-*ayo ni'fetskc. Vv Jili, 1 'he , nia , - have be«n iv ILo yu ,ii :, thinking out t> . r ijf-vo ■ • • egxin to thin]r fo: ili""ti- - h^ 1, . T' "/ w 11 wond'r \'l y t v< - ■• t< '871 an,d 187>'., s*'?ci '« /jwrici, to bolster up t -"- j. c "-• >. V, > i v not go bac\ " t tl.f» I .i' f iV^j'lf , ™ or evej? Rome? , O° c t" is tho daty o> , i ',-.,i-']■■KiK.na.ged insurance company to , i s.uppleniejit its psid up capital . wiln ! i-.sivons reserves.; The leafle;; dooS'B.ot-1 -RUSB'P.st othei-w-vse. ■ It is what is ileiia [ the -reperves aboufc whi«Ji =tfeo; , p-.il'lic dei-'ircs information. ' : Mi , . .Bendfill says that tlie policy-j hoixls-rs■ har ; G nathing to. do wHh ; thß" .p-ayi.HCfTfc- of the companies' divitkrnds.! ; Wiier«'cio .th.D. dividends come from?; On:, of-the premiums! Who payn the-; prisma "nms" The pol?cy-hoidorv, ; - . I X-Z ?Jr. Bsndall says the pi'Qporiion ; ot reserves to shave c?.p'Ws.l is (kubi.e j what has been stated % 1 .am -quite con-. tent .to leave -t rit that. PROFITEERS' "RISK" Mr Bondal'l says t.hs.t the original shareholders are entitled ;o payment | " for the risk they took, but surely -j 'tl'.-;re is a limit. Is it correct or! I other that the sharehoidevM in j ! one company have paid up 2/- per j j share-—tlv.t is 13/- per share, Juts | ; I -&?n transferred from reserves — ih&t \ I the div/Jend for 1921 was 13 .por-cenlVJ : ors. the amount shown as pa d j j 13 per cent, on 15,/-, equal to 1/11.4, : i :v.hat this actually amounts to Wih per joent. on tJie amount Paul up, viz., 2/-? I Is it just to the people of New Zeai.land that a ll .insurance company com*»yiih a State house.should ji»y ; iJlKciendfi £97/10/- per an-! : num. for every £100 paid up? Tlv! j [fact .that the amount is isiken by otjo i lor twenty people is beside the pv> % nt. i I The money haM to be foursfl Ju 'Nc-jv:! Zealand to pay the dividend. . <| Mr. Bendall mentions that then? Jβ I no -deaiih of competition. Y/hilf.i | there may be competition between file j companies for the .business, t\wr<!> in \ no competition as far .-as ratos -n-ra | concerned. Everyone who Iras i\ vhU-

|^ ,I gVi worth of cover in. -Tory ZorilTMJ [ lha the rates for all con y ,n- -----' ies are, &*c«i by t!Jo rnd°rv. n'pfr. , .' s>ocaticn. ' EVIDENCE PROM INSURANCE [ PROFITEERS THEMSELVES ! To coiiCiUfie, Ws i/iboiu , iVty omv i a acted the an Hie 'cflct Tho , I vi ere «.aken irum the Insurance Quar torly, June, 1922. Tlie coiVfinnHt *;* s contr.ricfl in j uo"w , .■jpeainir; to β-i tt>© Xow !ieaiw:a i^Be' , , m:ci<-r tht; signa ures c: su.n ULzeru c;s H. Amos, Ja^nt , " Pacini osh_ Pyron Brown, H. P. it-iw -on, v ho, m iirv s ti"r« Si)i» 10 the Alei*cai:L le and <.<<•!< |cral Insr.rcr.ee Company, Ltd., quote i i 3 f<3lL t'.at il:o shares of «,h' cjlii ; nany have advanced- 1500 pet , -jefit. 17.'Iiat the amount cf sluirei-jc7.ii;n' ; c'nj/ital actually invested was •■' L 7) .000' ! Tliat the .amount transferred froiu i'f> f?rcrves was £650,000., TlKt' the divid- ; end paid on paid-up "capital las: yf-ar I equalled 13 per cent. That lV>« J amounted to 7S per cent, to oviginal ; shareholders ,and -finally, that out of ; a total prem'uni in respect of -lire a".v "accident, of £1,485,000, 'ho total <:la?mvi ! on all the insurance companies in ; ivrw Zealand £502,000. : 1 ■■■•■■.■.'■ TAX REDUCED ON PROFITS ALREADY MADE When'speaking t o the Land a^ , rt jwcomo Tax Amenclment Bili, I-Ir. j\Ta?;••_. s-f.jr -said that tire remiss on vvoit'ld apI ply to incomes derived dur'u; 'U'iv!. , ■μ-ear ended March.3l, 1922, s.o tha: lli-9 I I abate W.G.S tvava profits ajjoady <mz(in. - Anyway, it .is, go)d fo-r tfco I .■vorkar.s to 'be told that if th-j monoy | for taxation is not coliec!ecl tiiroiiMi I the Jj.unlis, ,it -will be collected by way jof ijut'es on .other goocla. Th> vvor3:I er 1-aiow.s Oils. He Icuowd now tliat. .] hcv.evej. ,, the ,money Js coliec I. C'.'t, i\h has to pay; either throng x l hn bii'' ners man by of mcoma tax on pro 11 is, or by w.ay ot Cai:^ f.'ir, dutfc*. In the 'ultimate there is only one ; source frtvm wliich taxation can be i drawn—-the w-ealth which is created ' by the application of the mental and .i physical power of vsotkevs' in. f uo i primary, secomiary > and distributive .i'-ysterxi. Tile ellieieney "of thin army <| o-i' -workers is dependent on the teach- ! fng and • medical professions—and it j.is- because the farmers, business men, j doctors, and teachers are finding that i they, w-th the maruvil worker, are' l.^s o -subject to the control-of-the fiii--1 anc'iers, that-the change' to a : more

equitable, rational, and efficient system is coming. . . .•] .&fflfetffla;.'Comes Again--The next clay Mr. Buekleton gay« I another "intt'j-yJc.w to the "Post" as under;--- .-■';- . ~'. . '.-.■'. ; Mr. Henry Buekleton,. Genera*' Man- ■ ager of tL& Bank of New Zealand, was iniaii-vie-wied by.the "Post" to-day, and asked if he had any tiling to say to the st&te.niea£"of Mr. Nash, .National. Secretary .of the' New Zealand'Laboujr Party, which appeared.ln full'ln tiie . . " : P,ost" last. ■ evening. The questionsput to Mr. Buekleton, related, o'l .course, 'to that section of Mr, Nash's statement .relating to the banks. In reply Sir. Buekleton said: "I see noreason why I should gratify Mr.Nash'e curiosity .as , to what amount oil iava-t-ion of the■ ;bank lias been-reducecl hy. Mr. HollaiJ.ci aiid Mr. :Nash liave ku-e------•ly overstated the amount, and I Jiave no doubt the latter will accept my assurance that his figures are incorrect when I It'll Mm IJiaf iv working , *oiit ■the asses-s-aMe uicome ot" the 'Bank oi Nev* ZeaUuid he has ouiitlred ;'o filhnv for tlie bank's very large holding-of - free of incame tax war minds, ilie in--come fooifi w.ijkii Is depicted ivom Vμ assessable incenu l . THE BANK RTkTE "Mr. 'Nafch complains that the .Vc/bate or tax (as lie styles it) applies to lasi -year's income while the lower income rate does not come into force until January next; but he does not point out that -when the tax* \fas raJseti aaginst the LanJis the-reverse was the . case, to the bank's disadvantage. M)\ Nash very truly says the Commonwealth Bank's rate on overdrafts has never moved from 6 per cent.., and he asked if I expect the average business man to "believe that up till June, 1019, the New Zealand banks were psly charging 5i per cent, interest on over- . drafts. .■."■'" - ' "These are the tacts: Th* < vmioon- ' wealth Bank commenced business iffi '. January, 12-13. From 1911 to the middle of .1912 tJie minimum rate on otcvdrafts in New Zealand was 5 per cent. Fro the middle or 1012 to July, 1920, it was'si per cent. In 3uly, 1920, it was- increased to 6 per c<3nt.; in January, 1921, to 6a per cent.; and In February, 1021, to 7 per cent. ARTI-FICIAI*. "STRINGENCY"-' "Business men and others will remember the acute financial stringency

? that set in at the end of! 1920, which '■ was, to some extent, responsible lor bringing about .the .' two latter in- .' creases in" the i*ate. All through 'the war the banks in New Zealand, desxdte increasing taxation and other increased overhead expenses, kept . advance , rates as , low as in any part ol th«. . Empire—lower, indeed, if the heavier taxation in New Zealand is allowed for. Overdraft rates are determined by a number of factors of which taxation 'iw one. ''Allowing for income tax on th-J bank's advances to New Zealand since 1913 (when the Commonwealth T'suk started), I am satisfied the Bank of New Zealand has averaged 5h per c-titd. on its advances*, THE DIVS. ''As to the dividends paid .by {.he Bank of New Zealand, I may remind Sir. Nash that from 185)4 the bank, ior a period of 1h years, paid no divideni.l3 at all; for the next five years only - 5 per cent.; and that over £2,200,000 of capital and the premiums on issiie. of share capital has been written off to prc-vr:: forTosuea. This puts an f ai\~ 'j iire-,y 'aii'i'ci'ent _cumple-xion on the rt l -- ' j ttr.-ns-that shareholders have received I o-! '.heir investments in the bank. j - 'Mr. Nash goes on to say that If the ! ""oeunonwealtn Bank profits ol £ J,319,608 had been taxed at the highest race ever-la force in New Zealand the tax would have yielded £1,91,5,078. These figures are quite valueless, as it is Impossible for anyone not knowing the amount of free of income tax investments hold by the Commonwealth Bank to make an esti- . mate that would be likely to be within hundreds of thousands of pounds of the true figures. D T JD ARGUMENT ■"Mr,-. Nash i'lirlu.er -.staled." Thy Co tit ■; monwtidth received all the profits. This is misleading, and J absolutely deny that any portion of the profits of the Commonwoallh Bank has been paid to the Commonwealth Government, so how could taxes have been . remitted thereby? "As to the last two questions put by Mr. Nash, I answer as follows: —The 1.921-22 rate of interest on overdrafts ; was to some extent influenced by the j amount payable for. incon*e,tax.- The; bank's assessable income for li'2l-22 j .was known^when the recent income ! tax" legislation-was enacted. '"" " j Mr. Bucklctom has shown' to tho i "Post" (in roniUhrv:''-) the income tax ; figures for the Bank of New Zealand j for this year. They bear out his] statement that "Messrs. H. E. Holland;.! ■M.P., and \Y. Na- v ti, National • Secre- j tary of the New Zealand Labour Party, > greatly -overstate the amount o" tho reduction in income tax that the bank will receive. • ' •*•■ * ■"«• •» 'Labour's Rejoinder I am ctuite willing to accept 'ilr. | Buekleton's. assurance 'that the j amount of income frcm Avar loans was J not ascertainable, .but- surely Mr. j Buc'Kleton does not- suggest that tbls \ improves the position with regard to j remission. On these war -bonds, they pay no income tax- at which amounts' on- the- old base's of taxation to a remission of S/9 in (he £, and on io .-day's basis & remission of 7/4 in j tho a. Against this, there is. the fact i.t'hs.t for a few years they have ae- ; copied a slightly lower rate of inter-! j 2St. than could have been obtained,' j but *"**& value of these bonds to-day is j such that oA-en tliough they were not: free of. interest, they would be eon- j side red a good investment. j BANKS' EXTRA PllOl'TT .Wiih regard to the retrospective na. j tute of the legislation, Avhat the La-j hour TYarty desired to emphasise wag I that on S Ist March last, the Bank of j New Zealand and other corporations j' had matJo large profits. Mr. Buckle-' ton admits that these profits we're | made with the knowledge that n cor-j tain sum'would haA*e to be repaid by j way ol income tax. The money waa ! there hi reserve for a specified purpose. The passing of the legislation made a present to the bank of this' amount. Mr. Massey, in speaking to the legislation said that the, toUl j amount of rebate was £5>29,100. In] addition, to the amount actually re- j cc-ived by Avay of rebate t 0 31st iVtarcrr" last,' tho banks have announced that '■•the oldcpverdraft rates avIH remaAu.in operation till January next. This means that they have received extra : profit"' for nine months on which again they will receive remission taxation. Mr, Buckieton refers to the "minixnum" rate on overdraft, "Minimum" rates for overdraft are unlike mini- ■ mum rates in awjard Ayages to this- ■ extent; minimum rates ©n over- | draft are so rarely charged that no 'j one dreams of getting the rate, but j the minimum rates of award fare so j rarely exceeded, that, if an employer pays ove't the award rates, Ue' booms \ ■,s|a©' €ad£» ■ ■ .-_. ■ " .""' •

' PASSING' TAKES 1 ON:'■ \ ■':■■■:■ -...; • • Mr.; B>4ckletonj admi.:|i that the lia- ; bUHy for income'tax is,, one of the ; factors oil which the raijes' for overdra.lL a-t'e based. This- supports the Labour Party's contention that the power of the banks to-day is such. 1 that, no matter how taxation is adjusted, they will ' pass i.t; on to the public. Mr-. Buckleton says that' he ' is- satisfied t,h.a.t, allowing for- income , -tax, the rale for overdraft charged by the banks averaged 5.V per cent. In a previous paragraph.''■'■'"lre mentioned iliat for- one '?■&& a half years the rate -was 5 per cent.; 8' years 5J per . cent, half year 6'per cent.,.one month 6.i per cent., two years less one month , at 7 per cent.— a l>eriqd of twelve years. Taking the average over this period thelites vrork out: a.t 5 2-3 per cent., and yet Mr. Buokle'tdn says.that the bank has received S J. per cent net after making iull allowance for ifneome tax. I suggest to' Mr. Buckleton that tho money 'received, by the bank for the -full pfnod mentioned by him represents well ov,er 6£. per cent. on the amounts".actually advanced by way of overdraft. Mr. Buckleton re-, fers to the past history of Hie Bank of New Zealand. J>t us. look into it. I BANK. OF NEW ZEALAND In 1895 the bank "was. ?n such a parlous condition, that tlis> Government was compelled from The / countryjs point of view, .to come, to the essistnnce -'Of the ban]?. -It guaranteed an issue of stock to the ■extent of £2.000.-------000 at 4 per cent, per annum. Th's I guarantee was the means of saving] the credit of (ho- couuiry.'' Had the] Covernztient- not pass-eel si>eci:al legis-! iation* the whole country would have ' J been involved in tiio collapse. shareholders '■■ interests had practical- j !ly vanished before- the Government stepped in, IS tlu? bank Had suspendod payment and gone into liqiiidat*'o*u, | ~ (Tie sliareholders 'would not 'only have i ' lost all the money pairj up, but would have''been liable for even greater '■sums. The action of the Government, 1 in effect, amounted to the -actual purI chase of the bank, Now, what lias ['happened sir.es-that' d?,te? It in true !;ihat. lor seven and a half years from 11595 the bank paid no dividend at nil,' 'but what was actualry happening! during period.? The resources j placed at the diftposal of the bank by j ■ Hie Government of Now Zealand "were I being used to rehabilitate the bank; In !i.he finane'-'-ai world/". Just, so soon as ! I the bank --w-as -on its feet, . demands _■ :were made by the Kliar«:holders thah j I the Government-should get out! They j j have been only partially successful,; I but as far as the people of New Zea- | ! !,u\d are concerned, the 'tacts for con- | j & are. that the determining | i factor in the continuance of the bank j was the Government, guarantee. the guarantee was given, the bank has made profits totalling £9,714,472. £1,(187,118 of this vra=j made during j (the years 1914-18. .£2,301,163 has; j been made during the posJt;-war per- j iod, ' the-largest' profit ever made in: ! the history of the bank being made* I in the slump year ended March 31. £ j They liaya paid ilivid- ! j end's ranging from 5 to ITi per cent;! j twtniy. years averaging 12X per cent. i They have placed large sums to rej.server.' -The secret reserves arc. of! ! course, not known, but one important comparison i.s Ifinded property. Will Mr. Buck'lelon tell the jvcople tit New Zealand what, is the actual value vt the land, buildings, furniture, plant, o*;c. of the. bank us .at March 31. 1922? jl suggest that ft is -nearer £1,250,000 J than it is to -t'he figure shown in the .-balance sheei. Jji. the reporj-. for 1915, J the land tax value is given a-.£777,306. jThe manage-rls vahia- )is £751,708. j Mr, Beauchamp ?a!il at annual j meeting: who have travelled through out New- Zealand and have seen a good many of our j offices will' underslanil that tho amount at wliic' hi he bank's proper- ! ties stand in our books and in our (.balance sheet is a very low- figure j i compared with their value." • The j j small lniv-i which se-rve-fl as offices: in i ; tho early "ninef e,s in the country: I town.s, and tlie more substantial j ! buildings in the cities .wore valued in -i |1900 at £422,349. The palatial! ; buildings which stand on the most valuable .sites in our cities to-day, are valued in the 1022 ibalance sheet at £296,472—a decrease- oj £125,807. Will ■ any ordinary business maiV~suggcst ■ that th'-s tneihocl of writing down is ..•>■; ceesary? • » - / ' COMMONWEALTH BANK : There is nothing uusloading in. my ; staienient that tke-..--peoplo.. of the < Commonwealth receive, ail tho profits i maelo isy the Commoawealili Bank; It j not essential' thai .tho-money.-shoultV ' be transferred to tire. Consolidated" i Fund to prove tho advaatago. to t.n.e ( people. Of course mpy other nd- \ vantages have-'-accrwSd to the Coca- ' mouwealth State Bank, ] but that would; take-a, special article, i I did. Hot say- the -taxes -M.v been re- s mitled. -I : said; that. -,<^iey .'.could be Jn ( 'is9w 'Zeaiand-,^Jth::a- ; VBank. j Blr/ Buckletoa'^ : , ..0&-OTt&oo:s ',■■' aiur\vc/- ■ \o the tv. r o,: questio.'jij-'iyi;: tSie. ...Justiflca-' r . '.km for Ahe- ®u}}iis®s-kin._f*t'-il\e 'nciircs,' 1

- -b;,---the .'Labour -Party. "-The- answ r ers . amount Vt 0 admitting that the bank } ;had charged. certain prices to the New . 'Zealand- public.'- ThaL those prices i contained provision tor income tax. ; -Tbat. after the profits had been made . legislation was passed. / Hyhich made a present to.the Bank .of , New Zealand of oyer £50,000. The i main desire-of the Labour Party was ,to show that the Government .was ■ v,-orking on'-'the principle "that unto t everyone that hath shall faa givftjß, and to him that hath not shall be , U.ken that which he hath not." ' ; REBATES .-FOR RICH, POVERTY' 1 . FOR POOH J ; The, standard of living ■. for the , 'workers of New Zealand is such that ,no person '• investigating the matter will suggest that it should-be lowered. Unemployment and successive wage ,- cuts are lowering, that standard, ,and . I should be pleased to' give '*Th« , Post" (not in confidence) figures that . will prove "that the average worker in New Zealand cannot to-day, on the' '. standard wages paid, give to his wife and 'children* those tilings that are . essential if. the' home life is to be reasonable and happy and if the personality of the child: is to be developed to its .fullest capacity. Tho facts, are plain. Rebates were given to wealthy corporations and yet the workers' wages are reduced.