THE BANKS AND THEIR CUSTOMERS.

Dominion, Volume 2, Issue 442, 26 February 1909, Page 6

THE BANKS AND THEIR CUSTOMERS.

.:, The current issue of The Citizen, a;iito fortnightly journal published at Wellington, contains ;an'Article .violen|fcly. atta,oking ;yhat it /styles tho; bank .'monopoly.;; It- ie : a popular thing, just now; when money is "tight' , to assail-.these financial, institutions,;:and ; our ■ contemporary ..lias joined in the crusade with some vigourmore vigour : perhaps than discretion. The 'writer; of the' ar'ticlo; apparently can discover nothing to. commend in the methods of the ■ banks—his condemnation is utter, and he relieves his, feelings with a fine flow, of forceful language. Twelve months ago this violent onslaught would have.passed 'unheeded.'; To-day itimayro,ceive more attention than it,deserves. ; Jt' is. not our intention to deal, in any detail with the.article; : Thero is, no ; ;douht, some' truth in some of the writer's * contentions. The banks have.a-monopoly in so far.as tho;Banking Act.of. 1892; pro-, vides that no new banks can' open, business in New; Zealand, but it should, be; borne in mind that; monopoly, such as it is',, was 'created, mainly in •the. interests " of : ,tho Bank of Now Zealand, ■which had just been- assisted out of its difficulties by. the State and the. control of the/policy of which was largely : ;in the hands : of the; Stato-,through, the power taken by the Government in tho matter of nominating directors.: That control,still continues. But where the writer of the article strains tho/facts in order to build up his case against, the banks is. in his attempt to show that the .banks, are ■ responsible for the .' existing : depression. "Are not they," he.asks, "calling,in anS rofiising advances to hundreds of solyent credit-working.clients in:every district—town and country V. and he answers his question in tho; affirmative... :• It is because, there is a certain amount-of; truth in this' statement ;that ■■it is. likely'■ tomislead thoso .who.are not .'■' acquainted with ,the real position; ; Wejbelieve that where possible some of .the banks, hayo; boon calling; iniadvances,' but }t. must' not be inferred thorofroin;fchat the mbaoy. ; has'

been kept from circulation. As a matter of fact, the banking returns for the December quarter mako clear. that the banks have drawn liberally on their' funds to moot the demand for money." The figures show. that . the :ad-> vances and discounts for the quarter actually exceeded the deposits by over one million pounds. The detailed figures are given in the'following table, which also gives the-figures, for the corresponding'' quarter of 1907:— ;; .1 ;.-.i . '-.-■ ... Dec, Deo., ■ : ••• '1907. 1908. '■.'..■■"■ ■ ■■ .-■■ ■£. . :■ ' £.- :■ . Governmont deposits ...' .1,952,428 • 893,686 IW deposits ... ... 11,136,009 .' 9,529,657 Fixed Deposits ..... ; ~.- 9,651,26*., : 0,892,396 ' . ' 22,739,731 : 20,315,739 Advances' ... .„ ■ ... 17,913,858 33,123,523 Discounts ... . ... ...,2,069,272 2,300,228 ',•■'■;.■ :' '■■■.■' 19,983,130 : 21123,751 Yet The Citizen's critic assails the 'banks for calling in advances,' and accuses them of. refusing, to accommodate their customers. Even, banking. institutions do not. possess an inexhaustible. supply' of money, arid the figures quoted above show very conclusively that the banks trading in New Zealand have : at.least Btriven with the means at their disposal to meet the. recent exceptional- demands of ;bbrrowors.. That there have been cases. ; of individual '.hardship. is unquestionable,! and.:.no- cf^some'Jof- the banks who .have: been unable' muchrneeded advances may have suffered;' and may still bo suffering, serious embaix rassment. But this' unfortunately : is.Cin-: evitable. in times of. financial stringency following on a period; of prosperity andextravagance. The Chew's critic, should 'he,, trouble* to inquire, will find most, of the money-lending institutions .inexactly: the same position as the banke as to mak-: ing advances to their customers—the demand for .the'time.' being has; exceeded-'the; supply. The lesson .that might be preachedis the one we have■■'.placed before' ■}: our readers for sometime past—that is, that ■the: .period of : waste and .extravagance must .give way: to; a' period, of care arid economy.,'':;'".; -".- = _-"_■-'---"-■--:-""^s- : .:'".■ --.--V : -;-.' h .v : '.-.' : - !