BANK DEPOSITS
TO THE EDITOR. Sir, —“ Without Prejudice ” wants to know why. if the banks do not lend their depositors’ money, they take deposits at all, and pay interest on them. May I suggest that he does a little himself in the way of reading on the subject? There is any amount of information available. The so-called deposits are only book entries; they are, to use the language of the Macmillan Report, for the most part, the “result of the action of the banks themselves” in granting loans and purchasing securities. The taking of deposits on current account is the normal and inevitable result of the bank’s business. Fixed deposits, so-called, _ may be accounted for by reasons; first, historical, going back to the days of tangible money, and second, psychological. Your correspondent may realise the answer to his question from the latter point of view if he will ask himself the two following questions:—(l) Why do people go on doing what they have got into the habit of doing? (2) Why does the conjuror retain the hat? The interest, it may be added, is paid by the bank, by means of a book entry, which the community honours. —I am. etc., Truth.
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Otago Daily Times, Issue 22066, 23 September 1933, Page 9
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202BANK DEPOSITS Otago Daily Times, Issue 22066, 23 September 1933, Page 9
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