WELLINGTON NEWS

Hokitika Guardian, 23 July 1928, Page 3

WELLINGTON NEWS

BANK OF NEW ZEALAND.

(Special to “ Guardian.”)

AVELLIXGTOX, July 19

A drawback from which the Bank ol New Zealand suffers is that the State owns a quota of the shares of the Bank, and because the State holds shares members of Parliament, and particularly Labour members, seem to think that they are acting in the public interest to be constantly assailing the Bonk’s methods of conducting its affairs. A question addressed to the Minister of Finance, which appears on tlio order paper during the week, was asked by Afr AY. L. Martin, Labour member for Raglan, who desired the Minister to state whether it was a fact that the Bank of Now Zealand had such an excess of deposits over advances that it had an agent in Australia seeking investments for over £3,000,000. It may lie stated at the outset that the question is childish and shows a lamentable ignorance of the hanking practice and technique, but the question is calculated to make Air Martin appear as a financial authority to some of his thoughtless constituents. AYliat the bank is doing with its funds is no concern of the public who have a right to know what they are about', hut it is common knowledge that the Bank has investments in Australia made through its branches in Sydney and Alelbourne. just as it has made investments in London through its London office. The banking returns for the June quarter which were published in some detail in the newspapers showed that the Bank of New Zealand held in free deposits • as current account balances £11,960,606 and in fixed deposits £13,425,599 or a total of £25,392,205, and the advances and discounts amounted to £19,941,905 so that the deposits exceeded the advances by £5,450,300. The Bank has to pay interest on fixed deposits which compared with last year increased by £2,480,796, whereas advances apart from discounts decreased by £2,133,123. Instead of themselves using their funds in industrial and commercial enterprises or in other ways helping to develop the country they prefer to accept a small rate of interest rather than accept any investment risks themselves, and so the hank has been overloaded with fixed deposits. At the same time owing to the dullness of trade there has been less borrowing from the hanks, and the hank of New Zealand which holds the largest ainount ol fixed deposits is obliged to find investments somehow and somewhere; il investments of a suitable character are not to he had in New Zealand then they must lie sought elsewhere. Money, like water, finds its own level. Investors in bank shares are not confining themselves to the shares of the six hanks operating in New Zealand, hut are also buying other hank shares and shares that are only to he found on the Melbourne register. Some of our people have money invested in \ inform Nyanza sugar anil several rubber concerns in the East. II a private individual can invest money outside of the Dominion why not tiie hanks. .Money knows no political boundaries, national frontiers, creeds or religions, it goes anywhere and everywhere where there is reasonable security. Ihe Labour members are continually pin-prick-ing the hanks and particularly the Bank of New Zealand, and this pin* pricking, is an indication of the attitude of a Labour Government (if we have one) towards flanks and financial institutions and this is causing many people to seriously consider the matter. COAT AfONAYEALTH LOAN. It May last tho Commonwealth Government floated in New York a loan of 950.009,000 dollars (£10,000,000) at 92) through the J. P. Morgan syndicate and the issue was said to have Been a success, which it was not. for the syndicate were very soon hawking the bonds in London at 82.) and 89. This had the effect of lowering flic credit, of the Conmioinvealth in London. A few days ago London was approached for a loan of £7,000.000 at 98, and tlio loan was as usual underwritten, but tae response from the public was disappointing for only 13 per cent ol the issue or less than £1.000,000 was subscribed, the underwriters having to find 87 per cent. There has been for some considerable time a tremendous gamble in the New York Exchange, but the speculation is in shares and not in bonds, indeed bonds are being sold and the proceeds used for share speculation. Bonds of the Commonwealth dollar loan now being offered iti London at 87 or 5.1 points below the issue price. Aloney is now dear in New York tor the discount rate is 5 per cent and call money lias touched 7 per cent. Aloney. will become dearer in New York to break the speculation craze.