DEPRESSION PAST.

Auckland Star, Volume LIX, Issue 237, 6 October 1928, Page 13

DEPRESSION PAST.

CONVINCING FIGURES. .LATEST. BANK' RETURNS. . FUNDS 3i6bE THAN AMPLE.; . REMARKABLE IMPROVEMENT. - (By Telegraph.—Special, to! "Star.") WELLINGTON, this day.: ■ The. banking returns for. the September quarter once '.- again make very pleasant reading, for the banks are still .very flush of funds. . ' "', "''■ Usually the September quarter shows & reduction in their supply, of available funds, consequent on eSports being light at the tail end of the season,-and less than imports, and also to the farming section drawing on the banks for.funds to gather a«dj market the coming season's produce. This year, however, since the Juno quarter there is. only a trifling reduction .of. £43,584 in the excess of deposits, which.still stands at the high' level of £7,470,594.' This ensures the banks having an ample supply of funds to meet all : requlrements ior. the rest of the year, after/which the realisations from the sale of the season's produce begin to comp in. • : ' • : ■

This year the outlook:-f ot our exports 3s very favourable. Wool may not fetch quite such high prices, but. it .is . not expected to fall to any extent, if at all. Butter and cheese prices are higher than a year ago'and the outlook for meat is fairly.bright. ■•■•'. ' .;.-.. Following is a comparison of the main ' 'features in the latest returns With" those of three months ago:—' - • • H'. .-.-'■ ■ •"■ Sqpt.Vlo2S.- June, 1028. ::.■■''"'■■• v's.i ■- "£ ''-. •/■■: £ ■•.,• Deposits, FrceV.'; 23,344,054 •;.■ 25,357,145 Deposits, Fixed. 20,251,004 27,580,088 Deiioaits, Govt.. .17028,087-- "■ 1,050,070 Xote circulation --, C,10G,258 .. : 6,432,100 Coin and bullion 7,350,045 ■■ 7,507,404 Discounts' -■ 1,171,070 •-■'•'' 1,177,4G4 Advances ...... 43,947,454 ' 44,240,501 ! The free deposits;show a reduction of two millions, ;but tho -fixed r deposits /have 1J ; millions, .so : the net reduction in "the two classes' is only I £351,115,' which is a'very light decrease for this time of . the; year. On the other hand,/advances have -declined,, by •I £302,047 and discounts .by £5484, or together £307,531. '. The net, result of these movements' is: that the surplus of deposits; which .was £7,520,178 in the ijuno., quarter," ik' only reduced by I £43,584. Note circulation has contracted, • but this, is the usuaV movement in^tnis; - quarter and is not as heavy; as 'usual; . Metal' holdings are a little lighterj -due to some shipments of gold-to : \ Aub- ~ tralia a little, while ago. ••...,:■:.■ . ..-,.,.;' .' ; Comparison of Post-War Years. •/The .above: are the movements'in the last'three months. For.a more~coniplete and satisfactory survey .of the position the latest figures may be compared with , those of the corresponding quarter of earlier years. Taking the deposits first, the following comparison is obtained over a period of five years: — September'' '' ~" '" r.*> ?«., ,:. Quarter. '■•: Free. ■■•, Fixed. Total. : 192S ..... £23,344,054 £ 20,239,064 £32,506,018 1027 .V... ' 21,815,504 23,398.240 45,213,750 ■ 1026 ii...: - 24,907-,9Gl 21,074,802 45,982,853 1025 <;.., , 26,811',762 ■ 20,041,063 .47,753,425 1024 ...... 24,220,630 19,001,387-45,122,026

With tho:exception of tlie last June quarter the .total of deposits is now. higher than in any quarter-since June, ID2O. The increase, however, is all in the interest-bearing class, which has jumped up nearly? sixmillions in! tlie year, owing to the higher rate-of interest paid. It remains to beseenwhetherihe'recent reduction in the interest rate will materially reduce these, hut at present the hanks can weir afford to lose some, as ' they are paying for more money than they require at present. Advances and -"Discounts, i ', : - _ . Following is a comparison 'of advances .' find discounts for the September quarter of the past five years;— ;.. ...V - K ;■'■ [September • '-j '.■>.:■■-•?'':.' •*' ' Quarter. Advances. Discounts. Total. . - 102S .... £43,047,454 £1,171,070 £45,110,424 J027 47,415,303 1,300,508 - 48.815,231 ■ 102G 40,002,451 1,031,49.1\ 45,323,04G 1025 .... 43,505.077 ,1,410,283 Vi -44,075,300 '1024 .... 42,519,584. 1,403,497 43,032,05 l '•-Thanks to a good export-.seasonand a curtailment' of imports the h'orrowinjj public have been, able'to".reduce" their indebtedness ,to tlie hanks by £3,695,807 in the year, and the total of advances now stands at practically the same level' as iiv 1925. This shows, that the period 'of depression that has intervened since then is now over, and we .may look for better, times. '■■■;■, , ■ --.. • ,-.':'*'/ ,-;■ ■ j .- .- \ : Recovery of' Over 11 Millions. : ; .. :; The/most interesting ,and instructive ■ comparison to" be obtained from these .returns is , the comparison of. deposits ■with advances, which.is given below:— ' ':•_'■ ' '".- - . v- '-■■ "-.■■' Excess'-of iSept. qr. Deposits. : 'Aavances:' "Deposits. /-: •■'. ~ £' ' J*-:'.*;- , --'.; '■•:•?'£ '-'■'■': '■■■ 1028- D2,590,01S 45,110,424" 7;47G,594 1927 45.213,750 4,881,521.3,601,481 \. 1020 45,052,553' : 4;832,040 234,109 • : 1025 47,753,425 -4.407,5G0 2,778,0Gu • 1025 43,122,020 43,932,051 1,198,04u •■ ■{ 1923 43,038,830 42,826.728 1,112,108 jj These figures ehow a splendid recovery, of f11,075,070 in. the position as. com-. ' pared with a year ago, which is a • remarkable achievement. This .figure practically coincides 'with tho improve.-" 'merit in the balance o£i.tra<l-e,in.;the : year ended -August-31 last, of -£11,331,470, brought about by an increase, in,exports of £9,103,471, and a reduction" in , imports [of £2,105,005.' This shows'how closely —allied are the banking and trade figures. In 1921 there was an excess of.ad- ■ yances of- £4,593,946, -and an adverse trade balance, for the year which ended' September 30, of £5,972,155., ••..-•/', .i?or.the coming year "we should see a' favourable . trade balance and -a continuance of ample of. the . ; hanks.-j ■■"-'i'--:,-; ':./■: ■■*+- ■''- ■■'■;■ ■ -.-. Following are the shares"o£ the diiler.ciit Jbanks in" .these deposits .and ad-vanccs-7,.. . ...V.:... ■ >' - , ;: .' J : '.'.■'■ . r : ■ '. Deposits. '• Ad\-ance's. 5 . .., :,-.•; .-; •-;-.; .£ ■■■.'■- t. £ ■•- Bank- of N.Z. ... 25,170,232 19,800,300 Union Bank of ;. -: ." " T • Australia .... -5,021,335 ■ 5,145,931 Bank of N.S.W. .. G. 393,135 5,701,207 Bank of Aitst'sia-.. , : 4,031,877"' 4,700,307 ■Rational Bank.iN.ss: 8,532,451:.. 8,050,850 - Commercial Bank of ■ ■ " " . • ' Australia •..... \1,G40,95S 1,405,739 ; Each bank has, an. excess of deposits, except the National, Bank of Mew Zea- * land, while each' bank shows .an. increase in deposits, and only one bank, mercial,; has, an. .'increase in ..advances as" ' compared with a year ago. . ...... _.•.', : Government' deposits- 'are low at £1,628,687, or. £460,460 less than a year '. : ago.;.Tlie , banks' holdings'of Goyernnient , securities are higher than a year i'ago, at £5,108,483.-; ; '■ 3 ;; .'.'.'"' - ;

■ The only other items of interest in the yeturna-are, metal holdings and note Sireulation, -which compare &S-followe: — . ' Coin and Bullion. Note Circulation: Sept. qr. £.. , •■ £; • . 1928 .7,3.50,045 0,168,288 ' . 1927 7,873,620 0,270,329 1928 7,792,332 - ■: 0,485,438 • 1925 7,724,220 ' ' 6,566,308 1924 7,819,104 . 6,350,499 The metal holdings have been redueedby a shipment of gold to Australia of •some , £500,000 a ferw ; months ago, but this is not of any particular significance, and present supplies are quite adequate. The reduction in note circulation is entirely-due to the banks themselves 'holding less of each other's notes. Finances Will.Remain Easy.. . These returns, as a whole, indicate that we Shave fully recovered from the period of depression brought about by overimportation, coupled- with a drop in the value of our exports.. This ,, brought an adverse trade balance,' -which was reflected in. a gretaly reduced supply of funds available in the hands of the' banks. Now that the trade balance is restored the banks are once again in possession, of ample funds to meet all requirements. The raising of interest rates on both deposits and advances has done much to assist the restoration, and since that is accomplished the interest rates -were reduced in July. The banks, are now in the position of having.more funds than, they have suitable/ investment for.'vWe shall probably eee an , increase in Importation now, but should thpcoming season prove as good as present appearances indicate 'the■' trade .balance will remain, favourable and the financial position, continue easy,- withan adequate supply of funds'available, .which. ' -will stimulate tirade generally, and keep general conditions satisfactory.