BANKING POLICY

Otago Witness, Issue 3512, 5 July 1921, Page 6

BANKING POLICY

?, MR BEAUCHAMP’S VIEWS. 1 RATES OE INTEREST ON OVERs DRAFTS. AUCKLAND, June 28. , Some criticisms on the banking policy - were referred to Mr Harold Beauchamp, chairman of directors of the Bank of New Zealand, who, in his comments gave some . interesting information as to the present , difficult financial position. Speaking of de- - posits placed with public companies and t> trading concerns, he said it was at one time a common practice for customers of - hanks to arrange for overdraft limits, arid - as soon as that was clone to commence to t accept deposits at rates of interest sub- - stantially lower than ally bank could afford - to charge. It was good business on the part of the borrowers, but had business for t the bankers, who were practically underwriting the obligations of their customers, t without making- any charge whatever. With - the commencement of the present period of :> financial stringency the banks could do 1 little more than assist in the carrying on . of the industries of the country, and had no funds available for the payment of de--2 posit;:. In the oircumstanceo he could ' scarcely see why customers should complain 1 of their inability to get from the banks the money they required for the discharge 2 of their liabilities. In respect to deposits, t they took this money with their eyes otren, • and they had no one to blame except them- - selves for the consequences that had attended such a policy. “1 know there has 1 been a good deal of criticism,” continued r Mr Beauchamp, “in respect to the rate now t charged by the banks for overdraft accomt rnodation. In that connection I would 3 point out that during the whole period of 3 the war, and for several years afterwards, 3 money was cheaper in this country than in any other country in the world, and today the rate is no higher than that ruling ‘ in London, America, and other parts of 1 the world. Recently the Bank of New 1 Zealand paid per cent.' for temporary 3 accommodation in New York to other • bankers, while the Bank of England rate f was 7 per cent., reduced iccently to 6i, and 1 later to 6 per cent. At the same time some 3 of the largest and most powerful companies in Great Britain leave been issuing 3 gilt-edged debentures at rates varying from ■ 71 to 10 per cent. Tn this dominion, up ’ to the present, the highest rate offered by any company for debentures or bonds, has < been 7 per cent. All things considered. I have no hesitation in affirming that tho i people of l! vis country have no grounds { whatever for comnlaining about the rates 1 ruling for money.”