MONEY FOR INVESTMENT

Hokitika Guardian, 25 July 1931, Page 3

MONEY FOR INVESTMENT

(Contributed by X.Z. Welfare League)

There has been a good deal of loose talk in the Labour-Socialist quarters in connection with money available for investment. Some have gone so far, even in Parliament, as to suggest that money, instead of being applied to inhas been “locked Up'’ on fixed cjin the Banks. ’these people have expressed the' opinion that those large deposits quoted at £33,000,000 “should be applied to industry.’’

We do not for one moment believe that those who made this statement honestly believed that fixed deposits 'were not used for advances to industry. •We cannot help thinking that the suggestion was deliberately made to incite hostility to the financial institutions on the part of a section of the electors who do not know the facts. The object of such deliberately misleading suggestions is obviously to induce unthinking ptople to support some scheme of State Banking, which will give the politicians power to control the investment of available funds. 'lbis latter view seems justified by the admission of a Socialist M.P. that he is fully aware that money on fixed deposit is not “locked up,” an admission by the way which is in direct contradiction to the implied opinion of some of h's colleagues in their public speeches. He also expresses the view that such deposits are used only as is most profitable to the Banks, and not in the community’s interest. He advocates that all such money available for investment should be used for financing industries of national value.

This is all very plausible, but it must be remembered that money available for investment is comprised of numberless small savings of the people, who do want safety first so as not to risk their money. Thanks to the insecurity of industrial enterprise partly due to the depression, but chiefiy due to the harassing conditions imposed by the Labour Unions -themselves, the man who has money to invest is a bit ‘‘shy’’ of putting it into concerns where- Labour troubles jeopardise it. The result is that he prefers the smaller interest returns assured by fixed deposits in a bank and leaves it to the bank to take the risk of further investment ; he is-wiling, in return for that risk, to let the banks demand a profit;

What other system is possible? Who, under political control, is to say what channels of investment are more in the national interest than those now used. Furthermore,' do the advocates of a politically controlled State Bank believe that the man with money to invest is going to entrust it to an inst tutio.“ under political control ? Tt is absolutely certain that unless a State controlled Bank proceeds on the accepted cautious policy pursued by Joint Stock Banks it .would not be able to attract to its coffers the .savings of the p’ople bv way of deposits, and . would have none- of the money available for investment to direct it into any channel. You cannot compel anyone to entrust his savings to an institution in which he Ins- »' confidence, if this were attempted then people would rather hoard then' savings at’home' than deposit, them in a bank.