The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, DECEMBER 4, 1930. THE BANKING SYSTEM.

Hokitika Guardian, 4 December 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. THURSDAY, DECEMBER 4, 1930. THE BANKING SYSTEM.

In limes like tne ric-5... 11 l ; wuen the cioucis of depression nang neaviiy over liioSu couiniues of tne world, shallow tnmiceis, comments the Utago 'j hues, propound the opinion that banking institutions may, if those m control oi them so decide, cure, or at least materially alleviate, the economic ills by the exercise of some magic potver that will create a Hood of money, increase credit, stimulate trade and thus reduce unemployment. To entertain this belief is to misapprehend the function of hanking and to suggest remedies that might aggravate rather than mitigate the disease. The speech delivered last week by Mr Thomas Auckland from the citair at the annual meeting of the Bank of New South Wales which was briefly summarised in the cables, present a vie* of the situation, it 1 affelets Australia, that, ..unpalatable though it may be in some quarters, will commend itself to reasoning people as sagacious as well ..as -distinctly timely, Among the reasons which have produced what Mr Buckland describes as “the anomalous position of credit’’ in the dominions ho specially munitions “the unsound schemes of public finance’’ that. have attracted favour and the persistence with which Governments are leaning upon the banks to finance policies and commitments that have already contributed in a mhrked degree to the severity of the recession that is being experienced. Moreover, funds which ehould have been held in readiness to aid in the revival of enterprise at the opportune moment have been, and are being, expended on ‘ relief works and in the payment of the- salaries ami wages of establishments built- up on boom-tide activities in order to support a standard of living and an internal price-level that cannot be long sustained by the earning power of the taxpayer. This is a strong indictment, hut.it ip difficult, in. the light of existing conditions, to hold that it is framed on lines that are devoid of economic foundation. Mr Buckland holds that, without an immediate and substantial reduction of the costs of production, prosperity and the sources of public revenue cannot he restored. In expressing this opinion he gives authoritative support to views that have lately been publicly uttered in this Dominion. In the meantime, a heavy responsibility is being shouldered by the banks. The Bank of New South Wales, reaping the benefit of its policy of the past in budding up reserves to an imposing extent, is fortunately in a position which enables it to render effective aid to customers ponding such time as will I’cveal the turning of the tide. New Zealand has. Mr Buckland claims, shared proportionately with Australia in the assistance afforded by the hank. The gazetted returns in this country prove the just.ic- of this claim. For the quarter ended on September HO last, the advances by the Bank of New South "Wale; wore (running at about fifI.GM.OOO in Now Zealand while the average total deposits with the bank in the Dominion were some TO.IVIO.O'dO in the same tneriod. Moreover, the returns showed that, in comparison with the corresponding quarter ol the preceding year, the advances hv the I hank increased by C 701,000 although 1 a decrease in the deposits was recorded. It cannot be expected that the hanks, as commercial institutions which must protect the interests oi Pnth their shareholders and, ilicir depositors, shall incur undue risks hut returns of their transactions in Now Zealand suggept that thov are pursuing a reasonable as well as cautious policy. After all, the individual must, in the homely expression, cut his coat according to Ins doth and discipline himself, in the

presence of untoward conditions, to ilie exercise of all lieeuisaiy economies until the time arrives when the clouds will lift- ,as they surely will. The immediate outlook is not encouraging, but it is not so utterly depressing, into bullish the hope that, given ,tin sanity and sobriety upon the importance of which Sir Otto Niemerer recently insisted, a return of pivuperity may the anticipated in the possibly not distant future.