DEFENCE OF BANKING

Otago Daily Times, Issue 21987, 23 June 1933, Page 7

DEFENCE OF BANKING

A REPLY TO CRITICISM A defence of banks and banking is contained in the June issue of the Monthly Summary of Australian Conditions, published by the National Bank of Australasia, Ltd. The bank states that lower rates of interest have been the outcome of confidence in Governments and the banks. This, however, has not prevented destructive criticism of the Australian banking system. Such criticism disregards the fact that public confidence in the banks is unshaken ; that the banks have assisted the Governments and the people materially in the last four years and are still assisting them; that the banks have maintained the Australian credit structure at a high level; and that no proof has been brought forward to support accusations against the banks. It had been suggested that the people should be their own bankers, and that the making of large dividends by the banks should be eliminated. The circular declares that banks are not earning dividends. When times were good banks shared in the general prosperity, but now bank dividends represented a very moderate interest on shareholders’ funds. The profits made by the National Bank last year represented about 3J per cent. The circular continues: —

“ Perhaps if banks made no profits the critics would be better pleased, but who would find the capital? who would carry the risks? and who would deposit money with an undertaking so conducted? And if banks, why should not the shopkeeper, the manufacturer, the farmer work for little, or no, personal profit? They are all part of the economic system. “ While nothing that man does is perfect, progress is continuous and improvement certain. This applies to banking aS to all other of our many economic activities, and every sensible person knows that, in their own interests, thh banks will quicken that improving process whenever and wherever they can do so with safety. Unlike their critics, they are responsible to the community generally. Upon them centre the production, trade, and commerce of the country, and, ’in a large measure, they uphold the integrity of a large proportion of the people’s savings. While the banks welcome honest and (Jmistructive criticism, they are weary of the plausible insincerity or the culpable ignorance of the bulk of their detractors. Are these attacks upon the banking institutions part of a scheme for the socialisation of Australian finance and commerce? ”