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THE BANKING POLICY.

MR. HAROLD BEAUCHAMP ON PRESENT POSITION. BANK'S WISE PRECAUTION. Replying to some criticisms of the banking policy, Mr. Harold Beauchamp, chairman of directors of the Bank of New Zealand, gave some interesting information as to the present difficult financial position (says the Wellington Timos). •Speaking of deposits placed with public companies and trading concerns, he said it was at one time a common practice for customers of banks to arrange for overdraft limits, and as soon as that was done to commence to accept deposit at rates of interest substantially lowe r than any bank could afford to charge. It was good business on the part of the borrowers, but bad business for the bankers, who were practically underwriting the obligations of their customers without making charge whatever. With the commencement of the present period of financial stringency the banks could do little more than to assist in the carrying on of the industries of the country, and had no funds available for the payment of deposits. Jn the circumstances, he could scarcely see why customers should complain of their inability to get from the banks the money they required for the discharge of their liabilities in respect to deposits. They took this money with their eyes open, and they had no one to blame except themselves for the consequences that had attended such a policy. OVERDRAFT ACCOMMODATION “I know there has been a good deal of criticism,” continued Mr. Beauchamp, “in respect to the rate now charged by the banks for overdraft accommodation. In that connection, I would point out, that during the whole period of the war and for several years afterwards, money was cheaper in this country than in any other country of the world, and to-day the rate is no higher than that ruling in London, America, and other parts of the world. Recently the Bank of New Zealand paid 7A per cent, for temporary accommodation in New York to other bankers while the Bank of England rate was 7 per cent., reduced recently to 64 and later to 6 per cent. At the same time some of the largest and most powerful companies in Great Britain have been issuing gilt-edged debentures at rates varying from. 74 to 10 per cent. In this Dominion up to the present the highest rate offered by any company for debentures or bonds has been 8 per cent. All things considered, I have no hesitation in affirming that the people of this country have no grounds whatever for complaining about the rates ruling for money. “It is only necessary to look at the last banking .returns to see the enormous increase there has been in advances, and this has been brought about by transferring from London vast sums which were earning a better rate of I interest in the majority of cases than was obtainable in New Zealand.”

RESERVES HELD IN LONDON. In reply to further questions, he said that a very large portion of the profits of the Bank of New Zealand had, of recent years, been made in London. This was on account of the policy of the bank to keep exceedingly strong in the world’s centre, where special opportunities were offered of lending money at remunerative rates on term's which would allow it to be called up at any moment for transfer to New Zealand to meet such a position as had arisen during the last few months. It is not difficult,” he said, “to picture the position in which New Zealand would have found itself if money had not been kept in that liquid form in London and available as it has been during the past few months for transfer to New Zealand. (Supposing, for instance, these millions which ha|’e been invested temporarily in London had been lent in New Zealand, how would it have been possible to have called in any considerable portion of it to meet present demands?”

It was the same policy, Mr. Beauchamp continued, as that followed by the Government, which had kept considerable sums invested in London as » reserve against savings bank deposits. It was believed that on one occasion the Government had as much as £15,000,060 in London. As far as the Bank of New Zealand was concerned it had transferred from London within the last twelve months the sum of. £15,000,000.

Permanent link to this item
Hononga pūmau ki tēnei tūemi

https://paperspast.natlib.govt.nz/newspapers/TDN19210706.2.69

Bibliographic details
Ngā taipitopito pukapuka

Taranaki Daily News, 6 July 1921, Page 8

Word count
Tapeke kupu
725

THE BANKING POLICY. Taranaki Daily News, 6 July 1921, Page 8

THE BANKING POLICY. Taranaki Daily News, 6 July 1921, Page 8

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