LENDING RATES

Evening Post, Volume CXVII, Issue 144, 20 June 1934, Page 12

LENDING RATES

BANKS IN DEFENCE

Many -interesting aspects of banking ivere dealt with by the vice-chairman'of the - board"." oi'- directors: of the National ±.ank-;ot Australasia- (Sir Frank Clarke) at ~the annual {meeting; in. Melbourne on May '30.'- On the controversial question of •releasing.-' credits": Sir. Frank Clarke pointed.. :Qut:that:.m the'absence of a wider buying demand :.necessitating;an expansion of .productive industry the only way- the banks could further extend credit would be,by reducing the margin of security to an unsound extent, or by lending for unproductive "purposes, and he was emphatic that'the .bank would take neither of these courses. It is a mistake to consider that lending rates of interest by banks are. the .ruost .important factor in, the development of industry, but at the same tmie- Sir--Frank-Clarke" declared that these.ratesrare-now as low,as .they have ever been in modern tunes, and he contended that they/would not deter anyone from extending•- sound - operations. In paying. a; well-merited-compliment to hardworking primary producers, Sir Frank Clarke, directed, attention to the fact that in the last three years the National Bank had no record of having taken proceedings to evict any Victorian farmer, and that m less than a dozen cases had it been obliged to enter into possession of abandoned properties. "It has always been the considered policy of the banks," he said, "to keep entn-ely apart from polities, . but there seems to be an increasing and regrettable tendency on the part of politicians to drag them ,m. It can-only be said that tnis is'to-yonr directors?a.most unwise developnient^and tfiat the system which alike in England'and Australia has kept the finances soand in a time o£ unexampled stressrshould not be; altered- by inexperienced men without .-Very much greater cause than any which has up-to now been put forward." Sir Frank also: said that any downward movement of the exchange rate wouM be necessarily slow. If Australia's oversea accumulation became unduly heavy the situation..would tend to correct itselt of its; own weight. Meanwhiles primary producers-were : anxious that there should be no reduction from the £125 rate witnout due cause.