RESERVE BANK'S PROFIT

Chronicle (Levin), 22 August 1947, Page 5

RESERVE BANK'S PROFIT

REPORT ENJOINS PEOPLE TO WORK WELLINGTON, Aug? 21. During the year ended March 31, 1947, the Reserve Bank made a net profit, after providing for aepreciation and contingencies, of £581,784 2s ld, according to the bank's annual report tabled in the House of Representatives this afternoon. This amount has since been paid into the Consolidated Fund. The report, reviewing the changes in the amount of money in New Zealand in the form of coin, notes aiul bank deniand depo>its, says the predominant cause of monetarv expansion since tlie otitbreak of World War 11. had been the excess of external receipts over ex ternal payments resulting in Ihe accumulation of overseas assets and of bank deposits within New Zealand. Ifowever, a considerable part of the monetarv expansion would adjust itselt i as more imports became available. The report said that during the year the Government redueed its iudebted ness to the banking system hy £9,706,000, the money supply being redueed by this amount. This niovement was more than ofi'set, however, by the increase in trading bank balanees by £15,100,000 and by other items, giving ihe net increase in the monev total foi the year of almost £7,000,000. The present total, though higli comjiared with pre-war ligures, was not abnormaJ if allouance were made for prict changes and the special [)ost-war need of an economy 111 which there was ful, eniploynient. The report says that the trading banks liave alwavs loyally and cart fullv cooperated with the Reserve Bank in carrying out the requirements of Ihe Goveniment 's lending policy. The Reserve Bank, in dealing with marginal or doulitful cnses referred to, it, deals with them sohdy 011 merit and to sufeguard tlie confidential rolalion sliip between customers and their i-ank ers, the Reserve Bank does not ask that tlie identity of anv appiieant should be disclosed. Wliilo some exceptions were made, the general reipiirement was that au vances for such purposes as tiie pni chase of properly for lnvestnient, fo the ropayment of mortgages, for luxurj or sjiecuhttive purposes, or for capita' purposes, should be iinanced from tlu avuilalde money supply aiready in existence and not from anv fresh crea tion of credit. The report concludes: "Without iu any way under-estimating the value oi credit and currency control as an indispensahle factor in the maintenance oi economic stahility and progress, it it nevertheless an even more fundamentaj fact that high standards of living are derived not from money itself but from the quantities and qualities of goods produced and services rendered. These j depend on the utilisation and conserva/ tion of the real resources of the soil, J forests, mineral wealth and capital I equipment. | "The effectiveness of this utilisation [Of real resources depends on the energies of the people as a whole, their .pride in performing good work and the good administration of work, according to their functions in the economic structure. These qualities produce a growing productive efticiencry and there fore an increasingly high standard oi living wnen coupled with the intelligen. organisation of industry, trade, empioynient and finance; the maintenance o. industrial peace and promotion oi measures to encourage constructive cooperation between all people who havo dealings with each other whethei nationally or internationally. "