Time Has Come to Reduce Bank

Sun (Auckland), Volume II, Issue 345, 4 May 1928, Page 8

Time Has Come to Reduce Bank

BUSINESSMAN’S VIEW DIFFERENT CONDITIONS TO-DAY

Twelve months 230 Mr. v* Machin, then president 0 f th* Associated Chambers of Conv merce, approved the raising # the rate of interest on bank advances. To-day Mr. Machin say« that the time has come for a duction of that rate, as tl* monetary situation has by £9,000,000. Only once befort has the amount of deposits, £50.000,000, been exceeded. Mr Machin has sent the following open letter to the chairman of the Associated Banks. I am venturing to write thi ß to you as it is a year since, as dent of the Associated Chamber* * Commerce of New Zealand, I was cal*, upon to express publicly an opi*w with regard to the action of the baafc in increasing the overdraft rate fey shillings per cent., and on the pogfte as it then existed I could not do otfer than approve the action of the baafc This letter is published (although have given you private notice of ft because the former one was made potlie, and I am now asked by a of business people to say that we thi* the present conditions justify the ft. crease being removed, and we respee*. fully ask you and your colleague ft consider a reduction in the rate. You are more aware than any ©f of the most remarkable alteration ft the position of bank deposits and «£ vances which has recently occurred. On March 31, 1927, there was a grw» excess of over £5,000,000 in advaoea over deposits, but on March 31, this had actually become an cxce*a t deposits over advances of no less tftu £4,000,000, a most satisfactory rea*. ery of no less than £9,000,000. I believe that the amount of depj*a of £50,000,000 is now greater than 5 has even been in the Dominion (except, ing for one extraordinary year), that advances are below the averaa for the past five or six years. It is common knowledge that the year’s satisfactory figures are larger due to the fact that our income In* exports is about £9,000,000 higher thu it was last year, and v/) jaw good reasons for being doubtfu. whether the future will give us » large an annual income unless we eti maintain it by production, rather that by reliance on this year’s prices, era although meat and grain prices an still rising, and therefore I am mr. resting my argument solely on the acellent recovery of our trade balance. What will be most satisfactory you and the banks, and what must bt one of the justifications for the actio: of a year ago, is the most satisfactory drop of nearly £4,000,000 in or imports this last year. A year ago I said that it seemed h me that nothing had impressed ft* put lie so much on the question of npe: for economy as the action of the bant * n raising the interest rate, and lin still of that opinion Had. however, the prices of our a* ports not risen, this resultant ecunanj must have been gratifying, and Hi doubt we should now be looking toward for a reduction in the bank rtti of interest in, say, a year’s time; tart as the gods have also helped thte who have helped themselves, may we not venture to hope that the banfc wiL. take their proper place amosr the gods, and be equally generous at: helpful? A reduction of this high minimal rate of 7 per cent, on advances at tfce present time would be a great encouragement to all who have to work « borrowed money. It would give more freedom and buoyancy to business, and would, I believe, reduce unemployment.