BANKS .AND BANKING

Otago Witness, Issue 3619, 24 July 1923, Page 28

BANKS .AND BANKING

GOVERNMENT LENDING DEPARTMENTS. THE RATE OF INTEREST. ‘From Ode Own Correspondent.) WELLINGTON, July 17. During the course of his speech the Prime Minister had a few words to say regarding agricultural and State banks. A member had referred to the New South Wales Agricultural Bank, which he believed was partly a State bank, because if he recollected aright the whole or part of the Savings Bank funds had been used for the purpose of starting it. Great things were expected of it, but if he might judge from a letter he had received from a friend there tho other day it was not the success that was anticipated. Customers were paying that bank 64 per cent, for their money. “Why,” added the Prime Minister, “with the Advances Department I can beat that by 2 per cent.” Mr Wilford: You have not the capital. Mr Massey: Oh! haven’t I? Well, I guarantee this, that with the capital I have got I will do more and lend more to the settlers than 20 agricultural banks ccutd possibly do. I have enough to go on with. I am quite confident of that, and I am going to ask Parliament this session for additional borrowing power in case it should ho required before the House meets again. It may sound like boasting, but I am not going to stick at trifles so far as this matter is concerned. Many of the people of this country are in difficulties, and it is the business of the Government to see them out if possible. As to the comparisons that had been made between the Bank of New Zealand and the Commonwealth Bank, Mr Massey said he was not a shareholder in the Bank of New Zealand, but he could say that it was a Very useful institution in the country. The Government had a large holding in it which, with the new shares it was taking up, would amount nominally to £1,500,000. Thus about one-third of the whole of that bank would belong to the State when that transaction was completed. They could not allow that to be played with, and it would be simply folly for the State to enter into competition with it. Private individuals could do what they likpd. It they cared to set up another bank that was their business, but for the State to set up another institution to compete with the Bank of New Zealand, which was partly a State bank, would be folly. After quoting the oft-quoted figures in regard to the Commonwealth Bank, Mr Massey went on to say that he wished to see the rate of interest as low as possible.

As a matter of fact, he was the moans of getting the banks to reduce the rate from 7 per cent., which was charged at the beginning of the year, to 6A per cent. Of course, the reply of the banks always was: “Ail right. Reduce the income lax and we will reduce the rate of interest to those customers of ours who have overdrafts,” but he could not reduce the rate of income tax to the banks and allow other people to remain paying what they had been paying before. W-hen they reduced the income tax it would have to lie reduced all round. A [any people did not know that the income tax paid by die banks was not on the same system as that on which it was paid by financial institutions and private individuals. It was collected according to the ousiness done, and even if the bank did not maxe profit the tax was collected all the came