The Dominion WEDNESDAY, APRIL 14, 1915. THE FINANCIAL SITUATION

Dominion, Volume 8, Issue 2435, 14 April 1915, Page 4

The Dominion WEDNESDAY, APRIL 14, 1915. THE FINANCIAL SITUATION

The outstanding feature of the banking returns for the March quarter is the enormous credits that are at the disposal of the Government and the public. What this really amounts to may be noted from the tabic appended:— Mar,, 1011 Mar., 1915. Inc. £ £ x Govt, deposits 2,671,269 3,256,715 585,416 lYee deposits 13,475,771 15,053,732 2,482,961 Fixed deposits 10,554,479 10,870,507 316,028 26,701,519 50,085,954 3,384,435 It will be seen from the above that deposits have increased by £3,384,435, but about two-thirds of this increase is due to free deposits. The position- is easily explained. The farmers have been doing exceptionally well, almost every class of produce exported from New Zealand has been realising high prices, and added to this is the difficulty of importers obtaining shipments of goods from tho European markets. Had the conditions been different, the imports would have shown a decided expansion, but as it is they have shown a shrinking tendency, and the Customs revenue has in" consequence decreased. The increase in the Government deposits is evidence that the Minister of Finance has made adequate provision for all contingencies, and is able to meet all the engagements of the State and carry on public works much as usual. The expansion of the fixed deposits is just about normal. It is safe to say that there is an abundance of loanable credit in New Zealand, and the war, instead of limiting our local crcdits, has had the reverse _ effect. The superabundance of liquid capital is forcing up the values of the shares of divi-dend-paying joint-stock companies. Turning now to the free deposits tho movements as they affect the several banks are shown in the table appended: —

Mar., 1314, Mar., 1015. Inc. ' Bank. X X .£ N.Z; 6,319,202 7,-115.521 1,030,319 Union 1,928,127 2,433,980 505,859 N.S. Wales... 1,663,493 1,992,13b' 328,643 Australasia ... 1,456,586 1,666,716 210,130 National 2,062,093 2,355,334 293,241 Commercial ... 46,270 95,039 48,769 13,475,771 15,958,732 2,482,961 The gains are substantial in every instance. In the fixed deposits also all the banks show increases as the table appended discloses:— Mar., 1914. Mar., 19J5. Inc. Bank. £ £ £ New Zealand... 5,327,6G0 5,479,883 152,228 Union 1,278,095 1,307,621 29,5'G N.S. Wales ... 1,688,493 1,694,854 0,301 Australasia ... 005,371 G76,597 11,528 National ....... 1,585,759 1,699,251 1i:i,.|!12 Commercial ... 9,101 11,996 2,595 10,551,179 10,870,507 316,028 The increase here is just moderate, and is probably no more than would have been shown in normal times. The movements in the aggregates of the fixed and free deposits for the March quarter of a. series of years are' disclosed in the. table given below: — Tree Fixed Total Mnr. deposits, deposits, deposits, quarter. J." J; £ 1911 12,971,315 10,195,731 23,170,016 1012 13,611,116 10,372,756 2-1,016,902 11113 13,100.5311 ,J0,126,726 23.587.256 191 1 13,475.771 10,551.179 21,(l:)0.250 1915 15,958,732 10-870,507 26,82'J,23!) With the deposits showing such an abnormal expansion, it is nut. surprising that the demands on the banks nave been curtailed to an extraordinary extent.. Compared with tne March quarter o£ last .year, Lira advances exhibit a-n itierMse o( £456,501. but. as against this, tliv

discounts have shrunk by £382,689, so that the net amount of the increased accommodation given by the banks is only £73,812, whereas at the corresponding date last year the amount was £674,294.. Tho movements in the advances as thoy affect each bank are shown below: —

Mar., 1911. Mar., 1915. Bank. ,C £ £ N.Z 8,710,102 9,21'J,081 532,922 inc. Union 3,71)3,859 3,843,40!) 79,550 inc. N.S. Wales' 2,981,322 2,963,408 2,086 inc. Australasia 2.892,803 2,770,994 121,809 doc. National... 3,269,103 3,196,007 72,496 dec. Coiunieicial 32,394 08,642 36,248 inc. 21,649,643 22,106,144 456,501 inc. The Bank of Australasia and tho National Bank are tho only institutions to show decreases. The discounts as already stated decreased by £382,689, and in this movement all the banks participated cxccpt the Commercial Bank, which is in process of building up a business. The discounts and advances for the March quarter of five years show asunder: —

March. Discounts. Advances. Totals, quarter. 4; j; >■ 1011 1,790,806 18,009,581 19,710,390 U'l2 1,845,497 21,284,053 23,139,550 1013 1,967,351 21,025,105 22,092,456 1014 2,017,107 21,649,613 23,666,7.50 1015 1,634,418 22,106,144 23,740,562 Taking tho fixed and free deposits together and the advances and discounts, the excess of the one over the other is shown below:— ir l .... Excess of ■ilarcn Deposits. Advances, deposits, quarter. £ , j> 1011 23,470,046 19,710,300 3,759,056 1912 24,016,002 23,120,550 887,352 1013 23,887,256 22,092,456 801,800 1911 24,030,250 23,666,750 363,500 1013 26,820,239 23,740,562 3,088,677 Here also a strong position is disclosed.

Turning to the circulation and the coin and bullion, it will be seen | that under both heads there are substantial increases as compared with a year ago. Owing to the war the banks have found it advisable to hoard gold, and notes have gone into circulation. The figures for the March quarter of five years compare as under : — , r ' , Coin and Jfarch Circulation, bullion, quarter. £ £ 1911 1,661,463 5,030,701 1012 1,708,889 5,323,01+ 1913 1,703,318 5,032,155 19U 1,66G,!13!1 5,317,861 1915 2,633,585 6,420,550 The note circulation exhibits an increase of £972,646, and the coin and bullion an increase of £1,102,698, as compared with last year. A part of the increase in the note circulation may be regarded as normal, but the greater position is due to the withdrawal of gold from circulation. The banks have held possession of all the gold paid in over the counter, and have paid out in notes. It will be seen that the increase in the circulation is fully covered by metal. Viewing the returns as a whole, it must be admitted that there is no disputing the fact that the country is prosperous —at loast, the producers are, and were the facilities for imports normal, retailers would have enjoyed extremely good times. Tho country is economically sound, and if a depression is to follow the close of the war, we are in a position to face it; but New Zealand may. safely look forward .to a period of prosperity for at least a year or two after the war is ended, and until production in Europe gets back to formal.