ATTRACTING MONEY

Nelson Evening Mail, Volume LXI, 8 June 1927, Page 6

ATTRACTING MONEY

HIGHER INTEREST ON DEPOSITS

WITHDRAWALS FROM. POST Ol'TttCi''

(B/ TetosrswJi. -special to "The M<uJ..'j

CHRISTOHURCH, 7th June

Big wilhufawals of money appear to have been made, from I lie Tost Office .Savings Bank as a result of the extra attraction offered to depositors by the associated banks, but according to the opinion of men in financial circles, moneys are not being withdrawn from the mortgage market. The bunk rate of 5 per cent interest for two years' deposits is the chief attraction to many people wdio usually [dace money in the i'ost Office. ' ''

"Yes," said a bank manager, "the rise in deposit rates is attracting mucli money, most of it being funds that had been in the I'ost Office. Our action is not in any way depleting funds held for freehold mortgage. Such money for mortgages, however, is limited. There is money "available for mortgages of city and suburban properties. But generally speaking investors are not prepared to lend money on farms until values are reduced to a safe level. Farm values are too uncertain just at present." This man advanced the argument that the withdrawal of funds from the sayings bank for ordinary bank deposits is of actual benefit to'trade. Banks require funds in order to" make advances to traders and others. Most deposit money is used for trading purposes; indeed, the balance sheets of most .successful concerns showed they did not trade on their own capital. One tvadei' pointed out that while deposits may .have been increased by the action of the,'banks in raising interest rates, the rise for overdrafts has been a big brake on advances. Undoubtedly trade had tightened through the bank's action.