FUNCTIONS OF BANKS.

New Zealand Herald, Volume XXXI, Issue 9455, 10 March 1894, Page 4

FUNCTIONS OF BANKS.

The complaints made by some of the Australian Governments about the action of the banks in regard to rates of interest on advances has raised a discussion as to the uses and functions of banks, it being held by some that the payment of dividends was the primary function of the bank. . Mr. J. 11. Dickson, of the ltoyal Bank of Queensland, takes a different view. He contends that " the primary function of a bank in these times is to be of service to the community in which it is placed —to give business facilities, and, above all, to inspire confidence in its ability to meet promptly every obligation." The chairman of the Bank of North Queensland, Captain Sandeman, on the contrary, contends that the primary function of a bank is to pay dividends j and he goes on to argue, " the bank is merely a trading community. There is no sentiment abouta bank. The bank was formed by the shareholders for their own benefit, and the ultimate end of the bank is to give returns to the shareholders." _ Perhaps the truth, as in most cases, lies midway, namely, that a bank should be a public benefit, as well as profitable to its shareholders, and in banking facilities the colonies of the Australasian group are better provided than in any other part of the world. Further investigations have shown that in the recent financial storm which swept over Australia, panic caused the downfall of many banks, and not insolvency. Since that period the banks have strengthened themselves by holding larger reserves, an. increased proportion of their advances are on more liquid securities ; unprofitable branches have been closed, and a senseless competition largely curtailed. . These steps, together with more friendly and united action among the various banking corporations, in view of possible must greatly increase _ public confidence, which is the very first element in public prosperity.