BANKING AVERAGES FOR SEPTEMBER QUARTER.

NZ Truth, Issue 751, 8 November 1919, Page 4

BANKING AVERAGES FOR SEPTEMBER QUARTER.

A Position Calling for Calm Consideration. Readers of this column do not need, to be reminded how strongly "Cambist" has insisted upon the depositors m the banks being adequately secured for the moneys that are left m the charge of these institutions. Over and over 'again lias he told the story that the banks do not provide the money or capital required to carry on the trade oL ! banking-; but that this is done by the depositors who lodge their floating cash on current account, or on fixed loans. y Ever since the war, another element of credit has been fully exploited by the banks, namely, the note circulation, until thia latter has reached enormous dimensions of! inflation. To boil all of this down into an epigram suitable for the case, the banks trade upon, paper money and deposits entirely, for the paid-up capital of these institutions is a ' negligible quantity, compared with the total business carried on by them. Looked at In this fashion, the public have much to fear from the banks, or, on 'the other hand, they have much to thank these dividend gathering exploiters for. Of late years "Cambist" has tailed to discover where a "vote of thanks" can be furbished up for the banking monopoly. They have done nothing to -ease the DREADFUL ECONOMIC PRESSURE which the bulk of the people have suffered from, and there is no sign of them remitting a single item of "profit" which could bo wrung from the ■public under any conditions. They may brag about their patriotic assistance to the various war loan issues, but for these so-called services they received commissions that helped them to enlarge their reserves and pile up profits m many other directions. Tho only thing that can be said about them is that they have exploited the public "to the uttermost farthing." The sworn banking returns for the September cfuarter discloses a change or policy, which, m the opinion oi ! this writer, bodes no 1 gpod for. the people oS the Dominion. This is the first time on record that the foreign banks have attempted to trade upon liabilities far m excess of the assets held by them m this country. So important, for the purposes of this review, and the safety of the public, is this matter, that "Cambist" will here set out THE POSITION OF EACH BANK m respect to their several liabilities, and the assets held m short cover of the New Zealand position. The Bank of New Zealand's total liabilities were at September last, £32i923,C06, while its New Zealand assets were put at a face value of £22,072,665. The Union Bank of Australia, Ltd., at the same date had liabilities amounting to £6,---214.658, and only £5,784,560 of assets here. The Bank of New South "Wales owed to its creditors £6,025,300, but it only held m this* country £0,162,757 of assets. The Bank- of Australasia had creditors aggregating £4,932,572, and its assets came to £4,833,479. The National Bank of New Zealand, Ltd., averred on oath that it owed £7,554,GS7, and only had £7,151,892 of assets m the Dominion. The Commercial Bank of Australia, Ltd., showed that its liabilities were £726,067, but its assets totalled £752,356. In the latter case the old policy of trading with an excess of assets seems to have been followed, although the margin of assets over liabilities is very small. The foregoing statement of the liabilities and assets of each bank requires further elucidation,, and the simplest manner of shedding light upon the very weak position disclosed is to set' out m detail how much each bank falls short of ASSETS IN THIS COUNTRY to enable it to balance the liabilities. The Bank of New Zealand is short of New Zealand assets to the extent of £10,850,941. The Union Bank of Australia requires £430,128 more assets to balance its liabilities here. The Bank of New South Wales is short of £462,543 assets to square the position. The'Barfk of Australasia is only short of £99,393 to make matters level, while the National Bank of New Zealand fails by £402,795 to equal its liabilities. Taking these five banks together, they make a total of £12,---245,300, or, iri other words, these five banks are short of assets to that extent. In the opinion of "Cambist," nothing better proves how sterile our economic position has become. On every hand we are told that wealth is flowing into the country as the result of the. late bloody war. We have it dinned into our ears by the daily press that the people are saving vast sums of money. No one can do otherwise than • accumulate a competency m these "prosperous times," yet, here we find the hollowness •of it all exposed. The banks have failed to show the corresponding assets which all of the inflated currency should have accounted for, m addition to the large increase of banking deposits m ordinary circumstances. But these are not ordinary times. We are m an era of ROBBERY, EXPLOITATION AND FRAUD. The banks cannot, with all their gifts of window-dressing, obscure the cold, hard facts which underlie^ the monetary affairs -of this debt-ridden country. In giving the banks credit for the truth of their sworn averages, and allowing 1 that they actually held £46,---757,709 worth of assets m this country, it is well to remark that the assets include £1,243,444 worth of legal tender notes, and £237,831 of "balances due from other banks." These two sums make close upon one million and a-half. That amount should there 7 fore be deducted from the assets held; for a proper close settlement, between these concerns would have .wiped out these figures. The "legal tender notes" stunt, is nothing better than a "kiteflying-" trick. No one can feel overjoyed when they see the banks holding each other's paper m this fashion. The worst thing about it is that it sets the mind wondering -what is behind it all. Attending now to the details of the liabilities, the first item is "notes m circulation" £7,-357,047. Twelve months ago the paper money FORCED INTO CIRCULATION was £6,235,344. From this it will be seen that the banks increased their paper issues by over £1,120,000 m the period mentioned. This is a pretty hot pace for six concerns to i"attle on to the public. While the worst Government ever m office m this country struggles to float the wasted 'millions induced by the war, the banks have silently pushed out over a million pounds, by simply working the printing press and the bales of paper. The Bank of New Zealand managed to get nearly £5.000,000 afloat m this total, that being their share m the inflated currency comprised m the total sum mentioned for the quarter. Bills m circulation (mostly bank l drafts) are only £174,068, an increase of £33,000 for the year, showing how few bank drafts are m use nowadays. Government deposits £5,995,305 compares with £9,012,554 a year ago. The decrease is £3,017,249 for the period. As the bulk of tho State's expenditure was upon gold lace, tin hats, and the enrichment of the shipping- ring In the matter of excessive freights, we should feel thankful that any funds are left m the Treasury. It has been a huge drain at any rate. Free deposits, for which the depositoi's are charged ten shillings per year, come to £30*331,317; an increase of £8,655,072 for the year.

The fixed deposits have only Increased /, c £9l7 ' 607 m the same Period to i- 15,041,568. The increases added together make £9,602,677, from which nas to be deducted the decrease m v o ernraent funds amounting- to £3,---l llrl This leaves the banks with , &b,0d0,430 more money to work •on t than was the case twelve months ago. ; -but it is not the bank's own capital. ; Ihe money BELONGS TO THE BANK'S ! CREDITORS, • and for the bulk of it they do not pay s a penny of interest, nor have they ■ showed any anxiety to hold assets to : coyer the public m this country for this vast amount of credit. ' ™E? 6 . b £ n l? wili naturally, put at face value all their assets. Therefore we • may conclude that they have "done their best ' to prove how solvent they are. The kind of solvency that "Cambist advocates is one that is based upon the local holding of assets m this country, not those m other places. We all know that the banks doing- business here have branches In places outside of the Dominion, but no one here knows anything about the financial conditions obtaining m other lands. It is this that makes the present position one for serious consideration. It should also impose a conservative care for local assets—not foreign holdings. The chief bankins asset is gold. The banks are holding- £100,000 less gold now than they did twelve months ago. The last figures amount to £8,046,071, which is £700,000 more than the amount of paper money. That £700,000 is all .that there is m gold to satisfy thirtysix millions of demand deposits, if gold payments were enforcible. If this is not AN INFLATED CONDITION OF AFFAIRS, "Cambist" would like to know" what inflation is. Bills under discount is £120,967 more this year at £1,363,902. The smallness of the latter sum proves how restricted are the channels of trade m this county. Most of the retailers are m the grip of the mercantile combine that is busy priceraising-. The*' banks are holding- about £820,000 less of "Colonial securities" this year. The total amount is now only £5,252,334. Probably most of this sort of "investment" is m war bonds. Debts due to the banks, or, m other words, the overdrafts, are £28,785,---870. Compared with the corresponding period last year, these advances are less by £1,617,825. This shows that* meat shipments are clearing, and that perhaps some of the help given to the profiteers who had money to invest m war bonds is being lifted from off the books. For years past "Cambist" has pointed out how the* banks confine their advances to the rich middlemen and the land grabber. Looking at the requirements of real wealth producers, namely, farmers and manufacturers, one can see how the banks fail to do their duty to these classes. The large advances grafted to some monopolies prevent the numerous small advances required by the smaller fry. This is but the natural outcome of capitalism, and there is nothing so much affected by the workings of capitalism as banking-. ' To this extent they are perhaps blameless, but on the other hand, they may be "up to the neck" m the thing themselves. It must not be forgotten that the banks are THE BIGGEST. DIVIDEND PATERS m this countrj'. They are all foreign concerns, run from London. They are only at work here to exploit the people, and they have not a shred of right to claim service m the public good. Some people may take exception to these statements, but a little thinking power exercised m the proper manner will soon prove 'how correct they are. The Bank of New Zealand shows m its sworn returns that it is short of £10,850,941 m the matter of assets above-mentioned. That means that this country has been drained of capital to that extent. The vast sum of money is being used m London, whether to bolster up the decayed National , Government of this; Dominion, or , to carry over the speculations of the British meat and produce rings, no one can say. However, these things are affecting every person m the country. We are swamped ..with debt by the Government, and we are hampered by lack of banking help m the matter of local development. No wonder it is so, when over twelve, and a quarter millions of the people's money have been driven out of the country to suit the dividend-grabbing policy of the banking combine.. The "Dominion" m commenting upon the banking returns stated that the figures proved that the country was "never so prosperous as it Is to-day." That is perhaps true, if -one considers a handful of squatters, or a few Godfearing ti-aders as the country. But a wider view of matters is required before the term "prosperous" is applied to the whole country. "Cambist" finds on every hand THE GANGRENE OF POVERTY made manifest m our slums m town and country. He hears ,from day to day the wail of poor people against the high cost of living. The numerous second-hand clothing shops prove how our social conditions are dropping down to the degrading level of the Old Land, "where wealth accumulates and men decay.' 1 Just now the country is short of a vast amount of solid assets, how much it is impossible to say. But at any rate we get a glimpse of things banking, which is enough to make people think hard. Viewed from whatever angle one may take, the position is serious. No wonder that Sir Joseph Ward PROPOSES, A STATE BANK. That institution' should have been here years ago. It would not have cured all the evils of our financial system, but it would have made the export of over £12,000,000 from this country by a gang of foreign exploiters impossible. That is something to wish for. It is also something that the electors should keep m mind when casting their votes at the coming election.