STATE AND BANKS

Sun (Auckland), Volume II, Issue 382, 16 June 1928, Page 10

STATE AND BANKS

GOVERNMENT INTERESTS SUFFICIENT SIR ROBERT STOUT’S VIEW (From Our Resident Reporter.) WELLINGTON, To-day. Criticism of the advocacy of a State bank came from Sir Robert Stout at the annua! meeting of shareholders of the Bank of New Zealand yesterday. Sir Robert, alluding to the suggestion made in some Quarters# that the time had come for the starting of a State bank, said that such a proposal seemed to him to be peculiar, in view of the present position, and the fact that the Government appointed four directors and the London and New Zealand auditors. In his opinion, the Government had quite enough to do carrying out the work it already had in hand. He referred to the large increase in the number of Government officers and employees, compared with the numbers in the years gone by. On the complaints made of high rates on mortgages, he mentioned that when he came to New Zealand over 64 years ago the rate on mortgages—he alluded especially to pastoral tenants —was 171 per cent. (Laughter.) That amount had been gradually reduced to the existing rate. Was it the duty of the Government to destroy private enterprise and become moneylenders? If it was, it ought to lend to other classes besides farmers. There were many poor people in the community who had to borrow money. Why should not assistance also be given to them? Sir Robert remarked that the sir . of the chairman was a very able • n . It gave the shareholders a great 1 of information. Mr. T. S. Weston, in moving a \ of thanks to the directors, said thai he considered the difficulty now lacing farmers in getting accommodation was only temporary, and was fast passing away. It was inadvisable to ma ; amendments in general principles taxation in order to deal with a Lem porary difficulty. With regard to intermediate rural credit, he thought the committee of the House of Representatives did a wise thing when it added the clause enabling an applicant for an advance to fortify his security by the guarantee of a personal friend. RATE ON ADVANCES Reference to the high rate of interest charged for advances was made by Mr. William Watson, in seconding the motion for the adoption of the report. He said the banks were advised from several quarters that, as the interest rates were raised owing to the imports pxceeding the exports, so now that the position has fortunately been reversed, they should immediately revert to the former rates. “The facts are that the resources of the banks were quite sufficient to cope with the temporary excess of imports without raising the rates of interest on advances,” he said. “The increased rates would not have been forced upon the banks but for the competition of the Post Office Savings Bank by that institution’s departure from recognised savings bank business. The savings bank has recently modified its tejms, although not altogether to the extent of reversion lo the former position. For the correctness of these remarks. I have the authority of the chairman of the Associated Banks.

“We all wish to see cheap money in the Dominion, but the banks cannot bring it about until the maintenance and cost of their deposits are firmly established. Farmers and traders, however, can take advantage of the bank’s long-term mortgage scheme at an interest rate of 6 per cent., otherwise they have to pay the rates of interest on overdrafts which are proportionate to the fixed deposit, rates Further, it must be remembered that salaries and other expenses of banks have increased enormously of late years. Excess of exports over imports will, of course, greatly help in cheapening the rates of interest all round.”