ANOTHER TURN OF THE SCREW

Sun (Auckland), Volume 1, Issue 40, 10 May 1927, Page 8

ANOTHER TURN OF THE SCREW

THE mercantile community will share Mr. Downie Stewart’s regrets at the increase in the rate of interest charged by the banks on advances, the only difference in the point of view being that the Finance Minister’s regrets are political and academic: the merchant’s are real and tangible—because he has to pay. It seems to us that Mr. Stewart might have improved the occasion with a’ few observations concerning the duties and responsibilities of the hanks which have a virtual monopoly of mercantile finance in this country. The ordinary citizen will make a great deal more noise over an increase of a halfpenny on the 41b. loaf, and as a result politicians sit up and take notice, hut an increase of 10s per cent, in the overdraft rate will cost the community twice as much money, and it will be reflected in the cost of commodities. As usual the public pays. Having a monopoly of mercantile finance in the Dominion it is the plain duty of the hanks to provide adequate funds to meet the legitimate requirements of the trading community. It is many years since the proprietors of the hanks thought of dipping into their pockets to augment their capital: most of the accretions have occurred through the capitalisation of profits and if a hank is going to rely on its accumulation of profits to furnish capital for the expansion of its business it should resist the temptation to distribute large dividends and bonuses. To discourage enterprise and penalise business by putting up the interest rates at a time when its customers need more assistance than usual is short-sighted and unsound: it is also a reflection on the business capacity of the bankers themselves for failing to make provision for a situation they should have foreseen.