THE WAIPA POST. Printed on Tuesdays, Thursdays, and Saturdays. THURSDAY, 4th AUGUST, 1932. BANKS AND CREDITS.

Waipa Post, Volume 45, Issue 3212, 4 August 1932, Page 4

THE WAIPA POST. Printed on Tuesdays, Thursdays, and Saturdays. THURSDAY, 4th AUGUST, 1932. BANKS AND CREDITS.

IN New Zealand and Australia, as elsewhere,, a good deal has been heard of "frozen" credits. Such investments are normally those advances or loans made upon what has appeared to be ample security but which, through force of circumstances, has become unrealisable at short notice. In this Dominion the banks have been much more liberal in advances upon real estate or long lease securities than the institutions in the United Kingdom. The following note on the functions of banks by the city editor of the Times at May 28 is informative: — " Many blame the banks for the economic troubles of the world on the ground that they should provide more credit, but they overlook the fact that a banker is the last person to desire to see an industrial collapse. Apart from that is the patent fact that in Great Britain the bankers are finding difficulty in lending their money; no credit-worthy borrower has any difficulty in obtaining at a low rate of interest credit for legitimate enterprise, but it is not the banker's business to find capital for business undertakngs. A banker's function is to provide temporary accommodation; his object is to keep his funds fluid and not to tie up his depositors' money in capital investment. It is a common fallacy that a low bank rate is a great stimulus to trade activity of all kinds but only a relatively small part of the general trade is much affected by the rate for the temporary use of credit. It is much nearer the truth that a low bank rate encourages speculation, but that is a very different matter from ordinary business operations. There is no escape from the conclusion that at present there is no demand for credit, for nobody has any confidence in the immediate future. Restore the basis of confidence and trade will revive very rapidly, for shelves in the warehouses are practically empty."