NOTES AND COMMENTS

New Zealand Herald, Volume LXIX, Issue 21248, 30 July 1932, Page 8

NOTES AND COMMENTS

FUNCTION OF THE BANKS In an editorial on Banking and Trade the Times Trade and Engineering Supplement says The function of the banks i s not, as some foolishly suppose, to create credit or to distribute it indiscriminately at a low riite; the true function of the banking system is to facilitate trade and enterprise by placing credit at the disposal of those who need it for legitimate business, and it is obvious that such service can only bo rendered most effectively when the banks keep their resources fluid and make advances for comparatively short terms. The banker trades in money as others do in goods; it is to his advantage to turn money over as frequently as possible, making a small profit on each transaction. Perhaps one of these days the world will discover some better means of providing for the exchange of its wealth between one country and another thau the system which hps been evolved during tho centuries of commerce between nations, but while international trade is done by bill of exchange and credit margins are invested the less disturbance there is to the financial machinery from outside the bettor for trade. There is still sufficient gold to fulfil its legitimate function of settling small differences if it were allowed to circulate freely and were not hoarded.

PUBLIC EXPENDITURE "Answers recently given in the House of Commons show that six departments had 7357 officials, costing £1,584,003, in 1913-14 and 15,676 officials, costing £4,867,772, in 1931-32," says the Times. "Many other departments have so expanded that comparisons between the two years are impossible; but it may well be asked, with regard to comparable and incomparable alike, whether this increase in numbers and costs is really necessary, without supposing for a moment that savings of tens of millions of pounds are possible upon the salaries and services of public officials. And, even when the Government has finished examining the field of expenditure covered by the Budget, there remains the vast field of local expenditure, much of which attracts Exchequer grants and all of which is a charge on the nation, every bit as much as expenditure financed by national taxation. In this field also the figures seem to cry aloud for retrenchment. The amount raised by rates has risen from £71,276,000 in 1913-14 to £148,000,000 in 1931-32, and to this latter figure there should be added some £30,000,000 paid by the Exchequer to compensate local authorities for loss of rates under the Local Government Act. The debt of local authorities has more than doubled during the same period, and to-day stands at £1,200,000,000 —actually double the total in 1923. Their loan charges alone are today 25 per cent more than the whole of their income from rates in 1913-14, and their total annual expenditure is nearly £500.000,000. Much of this expenditure has been forced on local authorities by Acts of Parliament and much more by the spirit in which former Administrations hounded them on to extravagance. In this fact lies the hope of future retrenchment, for what one Administration has encouraged anothej- can surely check." RESULTS OF PREFERENCE

Writing to the Times on the objectives of Ottawa, Sir H. Page Croft, M.P., Chairman of the Empire Industries Association, said:—The main problem is that British industrialists and Empire primary producers are all languishing for lack of markets, while during the last ten years tho Empire overseas has purchased annually over £200,000,000 of foreign manufactures which Britain could have efficiently provided, and Britain has purchased annually over £200,000,000 of produce which tho Empire could have efficiently supplied. If we deflect these two great streams of trade from foreign sources to the Homeland and to the Empire respectively we will have provided a solution of a great part of the evil from which we suffer. Such trade represents the employment of a million workers in Britain and nearly a million workers overseas. It is remarkable how even to-day many fail to realise the great and speedy advantage that can be obtained fiom preference. When 35 years ago preference was first granted to our goods by Canada, our export trade to that Dominion had been steadily falling year by year until the figure in 1897 was under £6,000,000, and it looked as if we should lose that market entirely. Every year, under preference, up to the War, it showed substantial increases, and reached £24,000,000 in 1913, while in the three years 19281930 it averaged £33,000,000, a total purchase from us greater than any foreign country except the United States and Germany with their immensely larger populations. In New Zealand, our export trade was stagnant until preference was granted in 1903. In the next four years it increased 40 per cent. In 1913 it was £11,000,000, and in the years 1928-1930, £19,500,000, by far the greatest trade per head of population of any country in the world with Britain. In Australia, as a result of preference, our export trade increased greatly from 1909, and in 1913 it was £34,500,000, and as late as the years 1928-1930, just prior to the Australian financial crisis, it averaged no less' than £47,000,000, a greater total trade than we exported to any country in the world, although Australia's population is under 7,000,000. When this remarkable achievement is realised, can it be doubted that under a policy of reciprocal preference there are hopes for a great and immediate increase in our trade with the Dominions ?".