A NEW BANK.

Otago Daily Times, Issue 20501, 31 August 1928, Page 10

A NEW BANK.

ARGUMENTS IN SUPPORT.

SUBSTANTIAL INCREASE IN

TRADE

(Special to Daily Times.}

WELLINGTON, August 30. The argument that if an increase of £29,?S'J,OUJ in the trade of the Dominion in 21 years justified the establishment of a new bank in 1913, it was logical that a further increase of £62,500,1,00 in 15 years warranted an extension of the banking facilities of the country, wao used by Mr J. G. Eliott (Oroua) in the House of Representatives this afternoon in support of his London and New Zealand bank Bill.

Mr Eliott said that prior to 1693 s;x banks, were operating in the Dominion In 1895 the Colonial Bank was obsorbed by the Bank of New Zealand, and the remaining five carried on until 1913, when legislation was passed authorising Uie Commercial Bank of Australia to start business in the Dominion. In 1893 the iota) trade —that is, the value of our imports and exports combined—amounted to £15,500,000. In 1913 the total trade had increased to £42,500,000, and in 1925 to £107,760,000. The trade per head of the population, excluding Maoris, was £24 0s 9d in 1893, £42 7s 3d in 1913, and £77 16s 2d in 1925. Between the years 1893 and 1913, a period of 21 years, our total trade increased by £29,750,000. Owing to this substantial increase it was deemed desirable to grant traders and others additional banking facilities, and consequently authority was, in 1913, given the Commercial Bank to operate in the Dominion. Between the years 1913 and 1925 the increase in the total trade had, however, been remarkable During this 13-year period the in crease amounted to £62,600,000. If an increase in trade of £29,750,000 during a period of 21 years warranted in 1913 the establishment of a new bank, Mr Eliott said, it was surely logical to say that a further increase of £62,500,000 in 13 years fully justified the application now made to provide additional banking facilities. As snowing how these trade increases had been reflected in the bank returns, Mr Eliott said that in 1893 the deposits amounted to £514,500,000 and the advances to £12,750.000. In 1913 the deposits were £25,750,000 and the advances £24,000,000, and in 1925 the deposits were £52,260,000 and the advances £45,250,000 respectively. In 1913 the deposits and the advances each showed an increase over 1893 of £11,250,000. In 1926, however, the amount of deposits increased over the 1913 figures by £26,500,000 and advances bv £21,250,000. Mr Eliott next spoke of the profits made by the banks, dealing only with the Bank of New Zealand and the National Bank of New Zealand, as the figures of these two banka were, he said, more easily ascertained than the figures of the Australian banks. During the eight year period 1920-1927, the Bank of New Zealand earned net disclosed profits totalling £6,500,000, and paid dividends during the period ranging from 15 1-3 per cent to l?i per cent. It was but right to say, however, (hat the 174 per cent, dividend declared in 1920 included the distribution of £1,125,000 taken from the reserve funds in that year. During this same eight year period the National Bank earned not disclosed profits of roughly £2,100,000, and paid a uniform rate of dividend of 14 per cent. “ I have” said Mr Eliott, “ designedly used the term ‘net disclosed profits.* is well known that the actual profits are much greater than are the disclosed profits.” Mr Eliott added that the traders in the Dominion had some cause io complain against the cate of interest charged on overdrafts. Ho had been informed that in Australia the bank rate of interest on overdraft was 14 per cent, above the maximum rate of interest allowed on deposits. A deposit rate of interest of 4$ per cent, meant an over draft rate of 6 per cent In New Zealand, however, the banks worked on a margin of 2 per cent. A deposit rate of 4*4 per cent, meant an overdraft rate of 64 per cent. It was reasonable to ask that the traders in this Dominion should he placed on an equal footing with the traders in Australia. If his information was correct interest on overdrafts should be reduced by 4 P er cent, in addition to the reduction recently made.