MR SAVAGE AND THE BANKS.

Hawke's Bay Herald-Tribune, Volume 81, Issue 3, 27 September 1937, Page 6

MR SAVAGE AND THE BANKS.

Our Prime Minister evidently feels, and no doubt with some good reason, that it will be specially gratifying to a considerable section of his own more immediate political following that he should have an occasional tilt at the trading banks. Hence no doubt the threatening shakes of the big stick with which he sought to please some of his rank and file last week. At tlie same time it can also unfortunately for him be quite readily understood that his complete lack of business knowledge and experience renders him quite obiivious to the prejudicial effect of his utterances upon the industrial and commercial development of the country , So far as Mr Savage's vaguely worded complaints against the banks can be intelligibly interpreted he thinks, or would have his particular people think that he thinks, the banks are not being free enough in making advances to those who are applying for them. As a matter of fact, according to the latest pubiished returns, those for last August, despite all the discouragements imposed by governmental action, advances have since the same month three years ago gcne up by nearly ^"8|-million and even during the last year by some .-£3 3-4-million. Probably, having in mind the general revival of prosperity due to good export years, under any other Government than that we actually have they would have increased by a good deal more. What never seems to enter Mr Savage's wholly inexperienced mind is that the banks, as virtual trustees of their depositors' money, need to have some regard to the adequacy of the security that may be forthcoming. Unlike himself and his colleagues, they have no body ot submissjvt ers upon whom to draw in order to make good their losses. Nor does he seem capable of understanding that under the legislation he has put through securities that might have been acceptable under a different Administration have lost a very great deal of their value as such. Thus more than before have the banks to exercise caution in dealing with the funds committed' to their care. It may not be out of the way to remind Mr Savage that it is not so very long ago that the Bank of New Zealand — . now, as the result of careful management, a sound and stabie institution from which his Government, as a shareholder, dr'aws a quite substantial contribution to lts revenue— was hopelessly insolvent, and on the point of closing its doors. This was entirely as a result of pursuing the course which- he would seem now to wish all the trading banks to adopt — to make advances regardless of the sufftciency of security. As an Australian, Mr Savage may not be aware of this, but he may be old enough to reinember that, about the same time and from the same cause, hal? the banks in his native land were in much the same perilous position. What Mr Savage and his colleagues really require to do is to take some little lesson from the banks, not to attempt dictation to them. The last thing they seem able to realise is that they, too, are merely trustees of the people's money, to see that it is remuneratively invested and not just to scatter and dissipate it like generous almoners. What most of us cannot but wonder is as to how favours would go if the Governmeqt, as Mr Savage seems to suggest, were to take over the functions of the trading banks and everyone requiring banking accommodation had to go cap in hand to himself or to Mr Nash. In the meantime nothing could be better calculated to check activity on the part of the bankers and resulting industrial and trade recovery than the threats which he holds over their heads for the entertainment and rlelectation of his ultra-Socialist supporters.