THE BANK RATES.

New Zealand Herald, Volume LXV, Issue 19976, 19 June 1928, Page 12

THE BANK RATES.

Sir, —The chairman of the Bank of New Zealand, Sir George Elliot, in his address at the annual meeting, informed us that whereas in the March quarter of 1920 non-interest-bearing deposits represented 69 per cent, of the total, for the same quarter in 1928 they only represented 49 per cent. He further stated that the intense competition for money had compelled the banks to raise the deposit rate. 50 it seems that the days when the public were silly enough to supply the banks with 69 per cent, of the total deposit funds without receiving a penny of interest for it are over. And I think if the banks attempt to reduce the amount of interest they now offer for the other 51 per cent, of their deposits that depositors will go elsewhere with their money. They appear to be learning a little. Sir George says: " The natural sequence to a rise in the , deposit rate is a rise in the advances rate." It does not follow. There is another way to face the position and that is, that the enormous profits now made by the banks would be slightly reduced, and the 14 1-3 per cent, now paid regularly on the banks' capital (besides adding large •sums yearly to reserves), might require revision. I make this suggestion in fear and trembling. I know how sacred these annual dividends of 14 1-3 per cent, are, and the horror any proposal to reduce them will cause; but it seems to me that at a time when the whole commercial world has to content itself with smaller profits there is no reason why banks alone should be insured against the same effecls from the same causes. J. Thornes. 231, Parnell Road.