THE BANKS : FIXED DEPOSITS

Nelson Evening Mail, Volume XIII, Issue 202, 4 October 1878, Page 4

THE BANKS : FIXED DEPOSITS

We exlract he folio wiu^ from tha "Otago Daily Times'' of tha J6ih Septerabor : — Considerable speculation has existed in commercial circlet? during the past few days as to th* ciuss thit has led -to ndvesitPetnen's beint*; published by various banks, c (Faring to muke special flrrnngempnts for fixed deposits. The Bauk of New South Wales led off with au aJvev-Jsenieiit -published in this journal on Thursday hist, ___ 8 ; h^ 8 j, s «pp<>araiic_ three of the remaining banks have (.jifo-ved suit and in variously i\or_cd announcements intimate that they hiu prepared to receive money on fixed deposit by "special ariai'.gement," or," on the most (nvorn-. bk terms," or, to put il pLiu lungmaKP, 'they are prrpircd lo pay a higher rate of interest for money th-m has hitherto been ruling As tbis is n niat'er of the highest importai.ee to all classes of the community, we hava made particular enq-iiry ns to tho cause of (his bidding for money, If, as is cm ren tly believed* one of the foreign banke is making a push for tie money awaiting investment in this colony, or at present in the hands of oilier banks for the purpose of placing additional funds iv the hands of its head eflbe for distribution iv Auatraiia, this movement should be looked upou with extreme disfavor. At the beef, nn increase in the rates over those which have now been ruling for some years, cannot be viewed with feelings of satisfaction by business men Five nnd a half per cent on money lodged for twelvo months— the ruliu" rata until within the lost mouth or so--must certuiuly be regarded as a fair fate of interest, and any iucrense on th.t will, we think, bave a tendency to increuse the rate chnrged on advauces by thu bauks. We do not say that ibis will be the result, as perhaps the healthy rivalry which exists between our large monetary institutions will •avert tueh aa event; but such is the natural tendency of the incre*ased rate now being paid on deposits, nnd if an attempt is being made to withdraw money from New Zealand for an investment ia Another colony, then, presuming deposits to any iarge extcut sra plnced in the 1 auJa cf branches of foreign banks to be devoted to this purpose, the effect in commercial circles ■will be severe and depreesiug. As a consequence, in nldition to a 'probable increase in the rate of advances, there will in all likelihood be an applying of the "screw" lo those who iv easier times have received accommodation, Bud who may not be in a position to make any reduction of their indebtedness. The result is not difficult of discernment. The extensive investments in laud _nd other properties during the past year or two render this a time at which any calling in of advances would be moet severely felt. Caution therefore should now be the watchword of the hour, and we have no doubt will be so among thosa who attach any importance to the present movement on the part of tbo bnnks; and who are of opinion that (his and other Bigus of the times presage important changes in the money maiket. Taking a light*. r view of thesa banking announcements, there are others again of our commercial men whose opinions aro entitled to some weight, who cannot see anything in the commercial almo3phere to warrant the opinion that money is hardening to_uoh an extent ac locauseauy appreheusionof an increase in the rates charged for advances by tho banks. They explain away the present competition for deposits as being simply the result of business rivalry between tho Bank of New Zealand and the Bank of New South Wales. It is said tbat the former bank has been pushing its business with some success into the domains of the Australian banks, and, among other things, has advertised in Sydney and Melbourne iis desire to receive moneys on deposit account. J Thi?, then, it is said to have given rise ! to a desire for retaliation on the part of the Bank of New South Wales, and hence its public announcement in this colony of ''special arrangements " for deposite. We should like to be able to take this light view of the matter but we must confess to a feeling of doubt that the cause lies a little deeper. The New South Wales loan, unfortunately, hangs fire, and money has admittedly been tightening, not only in that colony but throughout Australia, for some time back. In the face of the repeated cable messages from home as to the depressed stale of Australian securities, which, no doubt, is only temporary, tbe New Soutb Wales Government have acted wisely in keeping back their loau ; but we Bhould like to s=e lhe million and a-half they need for present requirements safely in the hands of the ' Colonial Treasurer. It mny perhaps be not unreasonable to aek whether ' therß can be any connection between their disappointment in not getting the cum in question, aDd the present tfforts of the Bank of New South Wales to secure tho floating capital of this colony. It would be interesting to know the existing relations between the Government of New South Wales and its local bank. Has the bank undertaken to supply the funds at present required by the colony ? or does its present action in bidding for deposits eimply arise from a desire to secure money for ita own particular requirements outside of Government matters ? Tbere are questions which, under the circumstances, may be fairly asked, Meanwhile, we must content ourselves j witb (be knowledge tbat oqr 9wd loop I

is a 1 right, and trust that we bave no troublous times in store in tho imraeriate future. Iho Dunedin Evening Star of (he 12th inst. soys: — Wo observe from our advt riisiog* eolumaa ihit (lie banks are offei iv« special lemi3 for deposits. We sincerely trust this is only the result of » healthy competition between the New Z'hlrml sod the f'or^ian banks, and not «n indication of v probable stringency in the monry market; as We Understand is tho case ih or.S of the neighbouring colonieS, In relation to the above the Dunedin Morning Herald rankea Ihe following remarks:— A fear has been expressed that the apparent inlenlion ou the pixt of ihe backing inatittiiions in this (own to offer more favourable terms for deposits indicates a stringency io the New Zeahind 11101:07 miikel. We h - fiievH rhut it does not. Wa era inclined to ihink (hat a contemporary is nearer the m.iik in a teference hn makes to the Australian mouey market. In oue of the Australian colonies money is burdening-, nad nn anticipated withdrawal (rem New Z-a'ati.! to meet Australian requirements may be prompting tha New Z -Bland banks to adopt this means of protecting their deposits. Wo have, in times gone by, experienced serious inconvenience from' a drain of this kind, and wo trust the present action of the New Zailand banks wil! prevent a repetition of ic.