VIGOROUS REPLY

Hokitika Guardian, 24 March 1933, Page 7

VIGOROUS REPLY

TO CRITICISM’OF BANKS

THEIR SERVICE TO COMMUNITY

During the past six weeks there has been a revival of the criticism directed against banks in Australia, and especially concerning their lending policy. The National Bank of Australasia in its monthly circular for February makes a vigorous reply to criticism. “To those acquainted with the banking events of the last few years,” the review states, “recent attempts by certain critics to find fault with the hanking system stand out in striking contrast to the general acknowledgment of the loyal and invaluable service rendered by the banks' to the Commonwealth and its people.

“The comments of these critics, in the form of periodical outbursts, do not greatly concern the banks. The expansion in bank deposits during the most difficult period of the depression is, in itself, indisputable evidence of the people’s confidence in the banks—a well-placed confidence which is increasing as time goes on.

“It is regrettable, however, that som e politicians would seem t 0 aim at wrecking the very institutions which, by discriminate use of their resources, have assisted tTie governments in their efforts to surmount the grave difficulties' with which they were beset. It is especially regrettable, because it might disturb that feeling of trust which exists between the people of Australia and the banks.

POLITICIANS’ WRONG ATTITUDE

“It is altogelier a wrong attitude for politicians to adopt when they are so well aware of the great necessity not only for maintenance oi the existing general feeling of confidence, but also for continuation of sound banking policies. It should be the aim of every good citizen to bend his energies towards the establishment and continuance of solid recovery in the Commonwealth, providing well-paid .work ' for . tens. of thousands of citizens. “The real'need, for concern at the recent, thrusts at the banks, however, is : one for consideration, by individual members/..0f the . Community. The present attack is directed at the banking system, but, just as ■ likely, as not, may be against others to-mor-row whose: prices, profits, or methods do not accord- with/ the view of certain people.' The primary producer, manufacturer,: retailer, contractor, in, fact, any man in business, may. later find it necessary to defend himself against onslaughts of • this character, and it is as well that he should Uiidei’atand this aspect of the matter, and take steps to record his disapproval.

“Those dissatisfied critics of pre-sent-duy difficult business fconditions are prone to grope for relief, in the hope that it may be found in a form causing them neither suffering nor sacrifice—hence the attention that is often paid to queer so-called reform ' schemes, which can hardly be classed even as palliatives, and which, though .each acclaimed by its sponsors as the one. complete and permanent remedy for the ills of the. social system, never come to fruition.

CREDIT PROVIDED,

“What is needed is not so much cheap money for everybody, the capable and the incapable alike, but a resuscitation of international confidence and friendliness, and a recognition of the principle of international interdependence, which, combined, would lead to a revival in industry and enterprise, offering not only .reasonable prospects' of paying fair wages, but also winning profit and thus providing interest on capital. “One of the principal complaints of the critic is that the. banks have refused to ‘release’ credit. To well-in-formed residents of the Commonwealth it is very apparent, and it is also the general experience of the banks, that in time of depression business cannot as a rule usefully employ borrowed money. It is noteworthy, however, that, despite declining values, the banks have refrained from adopting a harsh policy of calling up advances, and have aslo provided a sufficiency of credit to keep the wheels of industry and production moving.

?‘The man in the street knows the inevitable end of the bank which is willing to lend depositors’ moneys without exercising reasonable discretion and care as to the nature and extent of the security and the objects of the borrower. Yet many critics would have the banks tread a path so full of danger and risk of disaster.”