BANK INTEREST

New Zealand Herald, Volume LXXIV, Issue 22629, 18 January 1937, Page 13

BANK INTEREST

Sir, —What is at issue is the question whether, under any system of banking, banks must charge interest substantially in excess of what they pay depositors. 1 have given the reasons that make such charges necessary, and Mr. Goss has not met those reasons. Mr. Goss ban not shown us how banks could grant loans 10 times as great in volume as their available cash reserves without attracting deposits equal to nine-tenths of their advances; ho has not shown how they could attract that volume, or anything like that volume, of deposits without offering interest on deposits; and lie has not shown how banking could bo carried on if banks did not pass on to their borrowers the interest they pay on deposits and the great bulk of the costs they must meet in carrying on their business. It is not true that the public is "eternally and overwhelmingly" in debt to the banks. 'I be public now owe the banks £11',0i1.618. while the banks owe the public £62.572,.'501. Thus iu place of the public being "overwhelmingly" in debt to the banks it ; is rather the banks that are in debt i to the public. The figures, in fact, make | it clear that private depositors, not the banks, are the real lenders, deposits being, as they always will, t> almost the whole basis of banking. Manure"a. J. Johnstone.