GOVERNMENT SAVINGS BANK.

New Zealand Times, Volume XXX, Issue 4411, 10 May 1875, Page 3

GOVERNMENT SAVINGS BANK.

The transactions of the Government Savings Bank, for any given period, are generally regarded as a certain indication of the material condition of the working classes generally ; but this is by no means an unvarying rule. In the last published New Zealand Qatetlo, we have a return of the Savings Bank transactions for the March quarter, 1875, contrasted with the corresponding period of 1874, _ which, without some explanation, would indicate a panic on the part of the depositors, ■or else a sudden reverse of fortune. The totals will illustrate what wo have said. Thus March Quabmb. 1875. 1874. Amount deposits Amount withdrawals .. .. 220,851 130,823 Krccßs deposits over withdrawals 330 31 Excess withdrawals over deposits 53,030 Those figures are significant. In no postal district of the colqny was there an

excess of deposits over withdrawals save one, and that one was Blenheim. The total excess of withdrawals, however, over deposits, was £53,030 in the March quarter of 1875, whereas in jthe same quarter of 1874 the deposits exceeded the withdrawals by £31,232. , VVo omit, in these figures, the odd shillings and pence. Now, how did this come about ? Clearly, the people were not worse oft, from January to March of the present year, than they were in the corresponding months of 1874 ; our opinion is, that they were rather better off. How, then, has it come to pass that such a run was mode on the Savings Bank deposits 1 The explanation is simple. It hos been caused by the competition of the Banks of Issue for deposits at higher rates of interest than the Government can afford to pay. As a matter of course, persons having considerable sums at deposit at 4 per cent, in the Government Savings Bank withdrew their money, and placed it at deposit with one or other of the Banks of Issue, who have been doing their utmost to bring about a commercial crisis by competing for* deposits at high rates of interest. As the Chairman of the Bank of New Zealand remarked at the late half-yearly meeting in Auckland, “the “offer of the present extreme rates for “ money was subversive of the best in- “ terests of the colony. It gave deposi- “ tors a present advantage, but withdrew “ money from the general channels of “ business. The time would come when “the banks would endeavor to recom- “ pense themselves for their present low “ profits.” Not a doubt of it ; but ive would like to put this question to Mr. James Wilmamson and the Bank he represents : “ Why should the public be “ compelled to suffer for the ruinous “ folly of the Banks ! Did the pablicput “ pressure on the Banks to offer such high “rates on deposit! If not, are they “to be punished because they respond “to the bankers’ call for money!” Surely there is something extremely inconsistent, and unjust as well as inconsistent, in the policy outlined by Mr. WiLilAMSOif; —a policy, by the way, which all the Banks will pursue, whether they announce their intention of doing so or not. The Banks ought not' to have entered on a policy which they knew was “subversive of the best interests of “ the colony;” and to threaten to punish the commercial classes, after doing what they could to “ subvert their best inter- “ ests,” that is, to cripple legitimate trade, is as unwise as it would certainly be unjust. Indeed, we suspect the public of the colony will not be content to lie under this threat. The Banks enjoy certain privileges under their charters, but they must not presume too far on public forbearance. If the threat above quoted, which appeared in our telegrams last Friday, be carried into effect, it will be absolutely necessary to guard ‘ ‘ the best “interests of the colony,” by establishing a Colonial Bank of Issue, and thereby save a large sum annually on the Government account, as well as protect the general public from the evil consequences of injudicious banking rivalry. But the startling fact which the Savings Bank transactions for the last March quarter disclose, is in part traceable to the competition for deposits by building societies and loan associations. These offer higher rates on deposits than the Banks ; and, indeed, the rates on deposit may be taken to indicate pretty clearly the value of the security. Many persons are tempted, no doubt, by high rates of interest, to lend their money on doubtful security 'in preference to Government consols, where, if the rate of interest be low the security is at least unexceptionable. In the present case, a very considerable sum has been withdrawn from the Government Sayings Bank, and we can only hope that the small capitalists will not have cause to regret their change of security. The following figures exhibit the excess of withdrawals over deposits, in the several postal districts of the colony in the March quarter, 1875 :

. .. £5,989 7 5 .. 1,397 17 5 New Plymouth .. .. 1,039 1 7 Napier ■Wellington Blenheim .. . .. 9,554 12 Nelson .. Westport .. .. 1.441 7 1 Greymouth . .. 5,039 19 10 Hokitika .. .. 5,106 2 8 Christchurch .. 4,637 15 0 Dunedin ., . • . .. 12,797 8 7 Invercargill 1 Total 5