THE SAVINGS BANKS

Evening Star, Issue 23383, 28 September 1939, Page 15

THE SAVINGS BANKS

TO THE EDITOR.

Sir,—l would like to suggest a possible channel for Government economy. You will agree .that a pound saved is much better than a pound more collected by taxes. The Post Office Savings Bank and the trustee savings banks (which exist on Government guarantee) held between them £72,000,000 of depositors’ money on March 31 1939. The whole of this sum was held at call, and lent out on long-term investment, or, as it is frequently put, they borrowed short and lent long. The rate of interest the depositors were paid averaged more than 2f per cent, per annum; a great deal of it received 3 per cent. The actual commercial rate for call money in New Zealand is practically nil;- jn fact it should pay for safe keeping. In some countries it occasionally is quoted at one .per. cent. I would Juke to ask why is tms country paying such a high rate for call money? Actually call money is unemployed money; it is money that refuses to take on a serious job. It Wants to be ready to move or fly the country at any time, yet we pay it at 9 rate at least 150 per cent._ higher than the competitive commercial rate it would otherwise _ earn. The thing is as ridiculous as if the_wage for au employed labourer was £5 a week and the State offered to take on. all unemployed labour at £l2 10s a week. Of course it is argued that the interest paid to .the savings bank depositors is given- to encourage thrift, and is therefore admitted to be a subsidy. I have heard and read a good deal ot critisism of the trading banks, but to my mind the savings banks deserve the most abuse, as they are the real bulwark of dear money and restricted enterprise. There are few concerns that can actually .guarantee a return to the small investors "as good as 3 per cent, at call with the whole State behind it. Hence it is marvellous that any new ventures are started at all. People wonder why so many are looking to the State to employ them, but the cause of it is not far to seek; they are artificially encouraged _ to hand their money to the State instead of using it themselves. Listening to Parliament I hear it suggested as a war measure of economy, that public works and relief works should be stopped to-morrow, but I think subsidised usury at high rates should be stopped first, and if that was done a great deal of subsidised labour would have new avenues opened out for it. Let the State offer competitive rates for money on fixed deposit, and to my mind if it keeps call money at cal] free of charge, depositors have no room to growl. In this way there should b(| a saving to the State of well over £1,000,000 a year, many new taxpayers on the job, and the whole country’s finances on a much sounder footing.—l am, etc. J.S. September 27.