Business and Boodle

NZ Truth, Issue 580, 29 July 1916, Page 4

Business and Boodle

BY "CAMBIST."

BANKING AVERAGES EOR THE EAST QUARTER

They Prove that War Pro

The bank returns have appeared m the "Gazette" at an earlier date than usual. This is a matter creditable to both the Treasury and to Mr. Marcus Marks, the Government Printer. It is to be hoped that the same promptness will be observed m the future. Now, the most astonishing feature about these returns is the large amount of Government funds held by the Bank of New Zealand. The amount quoted for the average holding during the June quarter was no less than £5,361,523, an increase over the figures twelve months ago of £2,256,309. In other words, the Government appears to have nearly doubled its account at its bankers m twelve months. Yet the same Government is busy working overtime to clap more taxes upon the workers of this country. But there need be no misunderstanding about tho true position. ■■■■'> Most . of.^.the -Government money is on account of the Fost" Office Savings Bank. The lar>re increase, then, for the most part, represents SAVINGS MADE BY WEALTHY PEOPLE who can get interest upon their money In that manner. They do not like to "tie up" cash for long periods m the banks, so instead they put It at call with the Post Office. Now, if it were not for the large use made of the Post Office by wealthy people, one would think that the workers were saving vast sums from their wages. The latter condition of affairs is quite out of the question, for workers and rentpayers are being bled m every direction, and probably at no time m the history of New Zealand have these people been more cruelly imposed upon. The political clap-trap about the growth of the workers' savings la played put. What the war has brought very clearly before us all is that the "boodlers" of this country, helped by the Tory Government, are having the time of their lives. They have guided the streams of wealth production into the narrowest channels, and the people, "as a whole," to quote our Baronet Treasurer, are prevented from reaching the full benefits of their labor. What "Cambist" would like to see, would be more wages, and more savings from wages. Not the inflated overflow "from the rich man's table" into the poor man's bank.

About the best way for New Zealand people to teach themselves some of the elements of sound banking', is to follow the practice of the banks which do business m this country. There are six banks busily engaged m the business. It is generally held that this country has never been properly banked and at all times m the history of our development the people havp found considerable difficulty m obtainjng financial assistance for their needs. When a client gets, very nasty about having his overdraft called m, or on being refused a loan backed up by good, sound security, he is sometimes courteously asked by the mild and placid banker to look at the yosi r tion of the banks as SHOWN BY THE SWORN RETURNS. Prom these he will see that the funds deposited with five of the banks are almost fully used up m advances. In a few exceptional Instances the advances exceed the deposits. But there is one thing that all the live banks manage to do, they endeavor to keep their liabilities cohered by assets In this country. They do not come here to bleed the country white of Its savings m order that New Zealand money may be used or speculated with at the other end of the world. This writer considers that m so far as the peculiarity here noted Is concerned, the people of this Dominion Bhould feel thankful and grateful to those banks which show such a regard for sound banking practice. ''Cambist" would go even further. He would advise depositors to stick to, or patronise, any bank which keeps its deposits m the country where they are gathered. Such is a sound policy. It is a policy which will insure a sufficiency of assets to cover its liabilities. A bank) by keeping its assets m excess of its liabilities, docs another good thing at the same time. It saves itself from the dangers of speculation. When money leaves New Zealand it goes upon v speculative jaunt. On how many other occasions has this writer hammered at the point now noticed ? People are beginning to ask one another Questions about the banks which were never heard before In this country. In fact it has come to this, that the worried Treasurer has been asked to make a law to prevent the banks exporting the money from New Zealand. To »how how necessary this Ik, one has only to read the bank returns for the Juno quarter, and the most hopeful thing about it all, to "Cambist's" mind, is that five banks will not have to change what thla writer regards as THI3IR GOOD SOUND METHODS. Let us look closer into the facts as sworn to by the banks. In the first place, the Bank of New Zealand has liabilities totalling £24,137,862, and the assets held here are only ! £15.380,889, a difference of £8,756.973. j This matter cannot bo pasaed without Home notice. The point Is that the people of. this country have loaned th<* Hank of New Zealand over £21.000,000, by way of notes In circulation, bank j drafts m circulation, debts* dun to other bunks. Government deposits, free | and intercut bearing deposits. This I vase Hiun all cornea from the p#op!e, and j only £it>.350,839 remains m Now ZeuI luml. Jt 1» well known that the differi enco (£8,750.973) is mostly employed m the London branch of the bank. The money cannot be used m two places ut I the name time. Ir him been soul out of thla country, and the pcopta here could j not borrow any of it. on any term**.. i "Cambist* does not suugeat that any of i It will he lost, but he doea aay that It I would bo wonderful If London la a safer place to loan money m ihun New Znaland. What do«» it mean to t)il« young country? The bank has taken over twenty-four million* proceedw from New Zealand people who Ju«(ly [ bollove the bank to b<? a worthy place m which to deposit. Thon over oijclit millions of thin money la planted away m London. Thla means thai on the flgurea «\vorn to by the bank, it hits sent 8C.27 per com. of Now Zealand money away from tho Dominion. To put ih& mutter m n tstmptg ""orm. to enable farmer* ami worker* to underMiami l»o position more clearly, we find (hat out of each pound \ho bank ha* got tho use of from New Zealand people Jt tutnOs over woven NhilllngH »n«l threepvnee away tv London. Nothlnff belter could m thin erlMc'rt opinion <*%- | plain how mon<*y is w.'trco for local development*, mul which rnltrht justify ttjf opinion ofVn *'jcpri»iwo<j thftt Varllu. \ moiit (ttiaii)f) step m am) ?»lop thnt kin»J of banking. Thrrc if* another «1<1« to thin qit«"«tlon.

THi: CONHCiUI'TION OK WfcALTJI. If w^Ai'h ir? to In* mß<lf» to pay |t« «b«rtf to ih« Kmji!r«', ivfiy no: h;»vp li l;ai()y m ibo country 7 Fancy n*a»riy iiin*

fits Exist m New Zealand

millions hiding itself at short call and other securities away m Fogland. The National Bank of New Zealand Is short of assets In this quarter's return. and as the not© issue allowed by the Government depends upon a bank's assets, it Is well not to overlook a matter x>l this kind. The head office of the Rational is m London, and unless a bank has its head office m the Dominion it cannot take liberties with Its note issue. The National had liabilities at June quarter of £5,358,189, while the assets totalled only £5,284,933. The' amount needed to bring things into the nappy balance is a sum of £73,256. buch a sum is but a trifle, but as the law stands it deprives the bank's notes hnnn^f^ 6 .^™" 166 - The ***** thing SwE ™ , wlth the Bank .of New : ?Xr 5^ ea a wn «* backhand this r7ti«fi e?° bonea about drawing attention to it. "Cambist" likes the -& JH .^ a fe «k Sieved that he has J«» %'^ a prod > but * c also feels assured that an Improvement will be S a fn ff «• P»W«ibank, «S? note emulation of all the banks this quarter is £3,918,335, an mS S ° W OC £1 - 09 3.434 m twelve Cambist" Is glad to see the so-called h« o m etal ',' (ffold) « from the position it once held. The internn/iJf po nt , ls «»at the banks havo quietly raised an extra million loan for t h6m sefves, and no one ever noticed it. What toll there is when th° State requires a million or two for public works, and yet we poor mortals allow the banks to enjoy

THE SILENT NOTE LOAN DODGE and pay heavy taxes on our borrow-

Sfpi Ping .profits do not retch hi p * mmm-not-strikf Si "f? tl l a f thlß did vTewin* tL^, "P«alnion. M when reviewing the bank returns. It is little ma tors of this kind that put Mas sey's freehold theories In daSger booking over the assets of the banks h h n« nrst B Jn r i kln * Item »» °he^ coin and bulUon. The total is only £518.4* greater at £7.268,453. It looks sSuU? Ues en of C °an P t r d h Wl i h **• HablHrikoSi al U tho bank s. a sum of £42,---615,924. Once, again, a hasty knock sssr Thir and a y - LITTLE LESSON ON THE- GOLD QUESTION

Slk U! i 8 if U th th h "I 0 " 1118 of people who Low iw % B were Btuffed wlth gold. The fact Is that the mass of our people should be taught to understand the banking business of the ?£!!£«£ l ? 3 L ea ! of wnß »ns time over theological bosh, or historical tarrldlddles. It Is to be hoped that hard facts about the gold will point the way to hard facts about paper money The use of the latter is growing. Who can see the end?

In the assets column a new heading Is appearing, viz., "legal tender notes of other banks." Prom this It would appear that there must be some paper currency lloatlng round which Is not a legal tender. As a rule, the banks contented themselves by running all noteß and bills together under the heading of "notes and bills of other banks." The change U very significant.

Coming to the bills discounted by the banks, the total this quarter u» less by £58.712 than it was twelve months ago. tho amount then being £1.352,717. In*i word, the only legitimate branch of banking being done here Is fast fading out of the accounts, There is no free business fa the country. It has been utterly cruihed out of our affairs by the morohants' associations. When personal credit Is overmastered by the unHcrupuloug methods of mercantile combinations, it naturally follows that the banks cannot do better than accept tho miserable handful of paper which our commerce provides. The overdraft of tho big man and the combine takes a fair amount of money, om will be noticed when It is pointed out that tho overdrafts total £22.015.022. on Increase of £933,476 In twelve months. Hls to be hoped thai some on' our worthy small men

AUE GETTING A LIFT from thin department of tho bank's business.

The figure* presented by the banks constitute a record for Now Zealand. At no time In Its history have the liabilities been ho huge. The people have trusted the bank* with 1*42,615,924. Some of H has been tnado by hard Hwvut and honest toil; much of It ha* been made by commercial villainy. A« the bank* havo noi classified their account* It la Impossible for outBldvrs to separate the "sheep from the goats." Everyone with money is supposed to be respectable. The leftslt iluvt can be asked of the bankors In thut they should keep enough assets m this country ta safeguard die owner.i of the £43,615,924. The sworn returns show that with the exception of the National Wank and the Bank of New Zeuland. such has been the policy of all the others.