HIGHER BANK RATE

Wanganui Chronicle, Volume LXXXIII, Issue 19844, 19 May 1927, Page 7

HIGHER BANK RATE

REASON FOR ADVANCE Explained by Associated Banks’ Chairman STEADYING EFFECT ON IMPORTS (Special to “ Chronicle.”) WELLINGTON, May 18. “Mr H. E. Holland,, in fiis criticism of the banks for the increase in the rate for advances, iails to real is* several important tilings, ” said Mr H. Leitch, chairman of the Associate?! Banks, to-Uay. “The banks need to obtain more money on deposit, and to do this they have had to raise the deposit race. . This being up, it naturally follows that the advance rate must be increased also, otherwise there would be only one course, which is to call up advances. Which policy is to be preferred: That of increasing the rate for advances, or that of calling up loans? The answer is quite obvious.” “We were reluctant to take this course, ’ ’ Mr Leitch went on, * * but were forced to do it by the condition of the country.” “As to the cry of hardship being inflicted on farmers, what is the positionf Mr Leitch asked and the average overciraft of the dairy farmer in New Zealand, I should say, is about £5OO or £6OO. The increase of one-half per cent, per annum will represent only about £2 10s to £3 per year. He would think nothing of spending that on petroL” 4 ‘The step has been taken only after very serious consideratioii,” continued the Associated Banks chairman, “and I believe, will have the same salutary effect that it had once before. Tho banks have not been free with advances for some time, and the result can be seen already, in import figures for the last quarter, anii, they will be increasingly apparent this year.” “As for being a combine, we are no more a combine than the banks in the Old Country which accept tho decisions of the Bank of England,” said Mr Leitch in answer to this contention. “There was no cry of our being a combine when wo reduced the rate for advances from seven per cent to 6$ per cent., four or five years ago. As I have a deputation from the country which waited on me, they arc better off than Australia.”

Mr Holland’s comments on the fact that the Bank of England is lowering its rate for advances takes no account of local conditions,” he said in conclusion. “The price of money in Englang has nothing to do with the price of money here, any more than with the price in America. Money is generally cheaper in London, but there have been times—war time for instance—when it was cheaper here.”

FARMERS CRITICISE BANKS PROFITS OF TRADERS CONFERENCE RESOLUTIONS (Special to “Chronicle.’’) PALMERSTON N., May 18. The tone of the Farmers’ Union conference at Levin to-day was far from bright when the recent increase in the bank rate was brought up for discussion. The Eketahuna branch sent forward a remit suggesting that the banks should; be asked to explain why they increased the burdens of the primary producers by raising the price of money at the present time, when, owing to the low prices being received for farm products, the farmers were experiencing great difficulty in meeting their financial obligations. ‘ ‘ The action of the banks is like kicking a man when he is down,” remarked Mr T. Richardson (Eketahuna), in moving the remit, which was carried. The discussion placed the conference in anything but a goo.il mood for receiving the next remit, tabled by the Waverley delegates, which read: “That this conference is of opinion that, by combination or otherwise, many trading and financial institutions are realising undue profits, and that the provisions of the Commercial Trusts Act should be more actively enforced,” also that the matter bo orbught before the Board of Trade. The general opinions of those who spoke to the remit were that many firms were adiiing to the cost of living by their operations, and that there were also a lot of unnecessary secret commissions, which were a burden on the farming community. The action of the Government in allowing matters to go on as alleged was strongly denounced. The remit was endorsed.

COMMENDATION FOR BANKS

WILL CHECK IMPORTS. WANGANUI CHAMBER OF COMMERCE CRITICISED. [For Press Association.] TIMARU, May 18. At a well-attended meeting of the South Canterbury Chamber of Commerce tonight, a motion of protest against the action of the Associated Banks in raising the rate of interest on overdrafts was proposed. In the course of the discussion which followed, it was said that the Wanganui Chamber was on wrong lines in the protest it had made, and that there was another side to the matter. The concensus of opinion was that the action of the banks in this matter was fully justified and would be productive of good in checking unnecessary expenditure and in causing imports to bear their proper proportion to exports. The motion was lost, only the mover and seconder voting for it.