BANKING FINANCE AND THE WAR

Dominion, Volume 9, Issue 2740, 7 April 1916, Page 4

BANKING FINANCE AND THE WAR

. The banking returns for the first 8 quarter of 1916 fully reflect the s effects of the war on New Zealand, j. We have obtained extraordinarily , high prices for the produce we have t been able to export, while the im- , ports have been restricted partly by j the inability of manufacturers to supply the required goods, partly by the shortage of tonnage available ] for the transport of goods, and part- j ly by the high prices ruling, causing j a check to consumption, with the re- , suit that money is accumulating hero rather rapidly. The banking figures , show this very clearly, and tho sali- i cut features may be tabulated as i follow-'— i Government deposits inoreascd by 1,599.224 Free deposits increased by ~ 3,133,217 Fixed- deposits increased by 1,311,697 All deposits increased by 6,044,038 Advances increased by 140,093 Discounts decreased by 146,763 Advances and discounts together decreased by '. 6,670 ■• Circulation increased by J'S™ Coin and bullion increased by iC0.505 The comparison is with tho corresponding quarter of 1915, and is entirely satisfactory under _ present conditions.' Had the position been normal an accumulation of credit of this character would indicate- a want of confidence, but under war conditions the accumulation is 'satisfactory. When the war is over we shall be able to find full and profitable investment for the money. Turning to the deposits, the aggregates compare as under: — Mar., 1915. Mar., 1916. Ine. Govt, deposits 3,256,715 4,855,939 1,599,224 Free deposits... 15,958.732 19,091,949 3,133,217 Fixed deposits 10,870,507 12,182,104 1,311,597 £30,085,954 £36,129,992' £6,044,038 The very substantial increase in the Government 'deposits is probably due to the revenue receipts being larger anticipated, and if that is so the Finance Minister should be able to show a useful surplus. Tho free deposits '.or current account/balances . again show expansion, and the 1 increases are shared in by all the banks as the table appended shows: Mar., 1915. Mar., 1916. Inc. Bank. . ■ £ • £ £ New Zealand... 7,415,521 9.160,994 1,745,473 Union 2,435,986 2,731,028 297,042 KB, Wales ... 1,992,1 M 2,403,786 411.650 Australasia ... 1,666,716 1,930.893 264.177 National 2,355,334 2,697,966 342,632 Commercial ... 95,039 167,282 72,243 ; £15,958,732 £19,091,949 £3,133,217 The fixed deposits exhibit a much larger increase than was the case a.'year ago, and an excellent view is obtained by taking the deposits for a series of years, as under: Free Fixed . Total liar. ' deposits, deposits. deposits. \ rir, £ £ £ 1912 13,644,146 10,372,756 24.016,902 1913 ..... 13,460,530 10,426,726 23,887,256 1914 13,475,771 10,554,479 ' 24,030,250 . 1915 15,958,732 10,870,507 26,829,239 . 1915 19,091,949 12,182,104 31,274,053 , Besides the banking deposits, there are the deposits in the Post Office Savings Bank, also those with the ', building societies, but such deposits would be covered by the bank figures. The advances, as already stated, j show the moderate increase of >■ £140,093, and tho movements, as they | affect the several banks,-aTo disclosed s -in the tablo following:— ! Mar., 1915. .Mar., 1916. Bank. £ £ £ ! HZ\ 9,C59,293 233,791 dee. I Union ; 3,845,409 4,244,825 «1',416in0. 1 MS. Wales 2,983.408' 2,760,810 222,598 dec. Australasia 2,770,994 2,834,755 . 63,761 inc. ' National ... 3,196,697 3,274,617 78,010 inc. i Commercial... 68,642 121,937 53,295 ine | • £22.106,144 £22,246,237 £140,093 inc. i. But this increase of £140,093 is more i than set off by the contraction of 3 £146,763 in the discounts,, so that the accommodation obtained from tho t banks is less.by £6670, as compared- , with a year ago. Taking the sd--3 vances and discounts for a series of . years, we obtain the.following:—

. Excess of Mar. Discounts. Advances.. Totalß. ' or. £ U £ 1912 1,845,497 21,284,055 23,139,550 rf l3 1,967,351 21,025,105 22,992,455 19H 2017,107 21,649,643 23,666,750 1915 1,634,418 22,106,144 15,740,562 i 91 6:;;; 1,487,655 22,246,237 . 23,733,892 The aggregate of the advances and discounts, though less than last year, is greater than in 1914, and the two preceding years. Taking the aggregates of the fixed and free deposits and tKe aggregates of the advances and discounts the excess_ of the one over .the other for a series of years is exhibited in the table appended: Mm. Deposits. Advanceß. deposits, or. ■ £ £ , £ 1912 ('. 24,016,902 23,129,550 887,352 1013 ' ".. 23,887,256 22,992,456 894,800 WA ' [ 24,030,251) 23,666,750 363,500 1915 '"■ 26,829,239 23,740,562 -3,088,677 1916 "!"..".. 31,274,053 23,733,892 7,540,161 As compared with a year ago, the note circulation increased by £531,968, and the banks have more than provided for this, as the coin and bullion has been increased by £m,Wo. The figures for a series of five years compare as under: — Marl ' Circulation. Coin and bullion. . 1912- 1,708,889 5,323,014 1913 ' 1,703,31? 5,1(32,155 19id .' 1,«6J939 6,317,86! ■ io'is 2,639,585 6,420,559 i9i6 ;;;;; -3,171,553 7,120,864 The banks are flooded with the idle money of the community, but the banks ' cannojb afford to hold the money idle. Since there is no scope for employing the money hero, they arc using it elsewhere, probably in London, where it is of most service to the Empire. This feature is_ exhibited by the assets and liabilities of five years: < M ar . Assets, Liabilities. 1912 ..„.. 31,427,451 28,195,668 1913 "■■ 30,866,091 27,820,730 19 4 •'" 31,526,774 28,567,207 IMS 32,738,712 ,32,698,488 ,1915;::::;. 34,123,759 ■ 39,445,071 The banks, or some of them, are using their funds elsewhere, otherwise the- assets would approximate to the liabilities. Taking the figures all round, they are very satisfactory, but at the same time they are apt to i»ivc a false impression. We cannot afford to bo extravagant, for all the money that is saved will be needed, if not' to carry oh the war, then it will bo wanted to meet requirements after tho struggle is ended.