STRINGENCY OF MONEY.

Poverty Bay Herald, Volume XXXVI, Issue 11842, 4 May 1909, Page 5

STRINGENCY OF MONEY.

ARE MORE BANKS REQUIRED?

POSITION OF BANK OF NEW

ZEALAND

INCREASED CAPITAL REQUIRED

(Per Press Association.)

WELLINGTON, this day,

Mr Harold Beauchump, Chairman oi Directors of the. Bank of New Zealand, was interviewed by a New Zealand Times representative to-day m reference to the Prini£ Ministers statement at fnvercargil that New Zealand is "undei banked," and that the bunks' should iii r crease their, capital, or else fa^iliti6f should be giv;en for an increase of banking institutions. - •'I am glad to sco," sa,id Mr Beauchamp, "that Sir Joseph Ward . admits that- the banks at present trading m New Zealand have done their duty to the public, Avhile at the same time he says we are under banked. Apropos ol that, I said at the half-yearly meeting of the Bank of New • Zealand : m December last: 'Having regard . to. the steady growth of all branches of trade and commerce, i.ii- Ne.AV Zealand, and the amount of money that is required for tlie. legitimate" development- :pf ifs resources, I believe the time is not far distant when ii will bo desirable, to take into, consideration the question ,of increasing the capitaJ of the Bank, arid thus bringing it riiore ... into line Avith other banks represented m t^ho Dominion.' Wheh'l/sriid. that I.,had, m vieAv the necessity ,of providing more capital for legitimate banking business, but not the introduction of capital for loan£ on mortgage. I am firmly of opinion that the latter does not come within .the .function of a bank. It is a' course 'which Avas undoubtedly followed largely by. the. Bank of NeAv Zealand many years, ago;,, and it is the course to Avhich we may attribute the Bank's financial difficulties, from which", it was extricated by Parliament. Tho lending of money to farmers and others for the acquisition of land' and its development should be done by the- mortgage and, investment companies, or .by means of the Advances to Settlers v Department. No .bank has a. -right to lock up its funds) (Avhich very largely are lent by tlie public either at call -.or at short : date) m advances on land. I am hopeful that during the ,coming session of. Parliament bur members will sco the aViV dom of authorising tho raising of large* sums of .money by the Government to be lent by the Advances to Settlers • De-'j partmejut. • , I ,•"£.£ to *he Bank of New Zealand, I pelieye undei' the present legislation it's capital can , only be increased' by authority i.froiin' Parliament. It has not yet been, determined by tlie Board \yhetner. ste^s >vill ,beitaken ; to attain that end, during the eQjnjhg. sossion, though I beJieye^ sooner., qr Tajer. something ,Avill haA'e to' "be, '..^ohe.uijj-k'.that direction, but such additional capital, Avould not be Available, for loans on mortgage, biit only for assistance for the grooving . trade of the Dominion., I do not, think, avo can look fojf any , relief from mortgage and investment., companies so 'long ,as. they have to face the competition of the Advances to .^ettlers Departmeht 5 therefore it is jflst iks Aveil to . face th'e position at once and. look to : that I)epartmept for the bulk ,of , the money that is required for mortgage, v '.-..'.- \ "I dp, not, think the present difficulties ,\vould be; met', by adopting "Sir Joseph 'Wura.R, suggestions tb increase the number of bajikij, trading; m. \Ne\v Zealand. Generally .speaking, the banks are able to supply money for legitimate banking purposes. It .'is only their failure to supply ' money , m respect of fixed loans! tliat nas brought abottt the present posi- j tion, added, of cbnrse, to the fact" that during the past few years there has been, jo, steady witlldraAval from the Do- 1 miriioh of* money that Avas lent theje •prior, to'v^he establishment of the' Advances to. Settlers Department. That is just the pohit: It i.s the AvithdraAval of the mortgage and investment companies that haa throAvn the demand for mOney on. the b^ardts and on the Department. Their reserves have naturally been restricted, and tho limit, so to speak, has now. been • i"cached. . .A. remedy is wanted to restore the restriction, but I don't believe that remedy j& going to be obtained by encourageing the establishment bf a 'larger numbeiv of banks than a^e iioav trading m the .Dominion, tliis for the reason I have ; already stated, that it does not come'.Avithin the pro;'vinco 'of bartks 'to advance money 06 Vvhat is practically fixed mortgage." ; \