THE WAR BOOM

Dominion, Volume 11, Issue 235, 22 June 1918, Page 8

THE WAR BOOM

AN ARTIFICIAL PROSPERITY

WARNING FROM BANK ■ CHAIRMAN WORSE TIMES TO COME

That the boom prosperity of war times is not going to last for long after the war ceases is the opinion ol' .Ur. H. Beauchamp, as declared in his address to the shareholders ol tho Bank of'.N'ew Zealand yesterday. . ■ "Tho prosperity of the Dominion continues though the war is still raging," he said, "or perhaps I should say because the war is still raging, for there can bo no doubt it is dependent on the 'demands created by the war. The British Government has purchased practically all the principal products of New Zealand, and tho figures of the operations of tho Imperial Supplies Ptirehafo Department illustrate the extent to which our producers have bemiiied. The figures up to May 25 are as follow:Purchases T'l payments commenced. £ Meat . March 3, 1915 2-1,0^,688 Cheese .\ov. 1, ISUCi 8,27-' 951 Butter \ov. 20, 1017 2,?1H,303 \Vool Due. 1, 1916 24,266 891 SlipeWool March 31, 1917 1,876 072 Sheepskins VeU 5, 1917 850,412 Hides March 19, 1917 .... (J95,8;10 Stiheelito Sept. 20, 1915 101,740 Other business 1,158,531 iGi,olG,ei The banking returns of the Dominion show to some extent the effect of these payments. The deposits (excluding Governniont) and advances for the series of war years show as follow:— ■ Mar. quarter. Deposits. Advances. 1914 21,Uut),250 23,6(i1i,750 1915 20,8i9,23il 2;Vi40,51j2 / 1916 31,274,053 23,733,892 .' 1917 3i,351i,540 27,69i,930 1918 3&,505,49S / 29,317,895 In the four years covered by the war, the uoposits increased by Xll,-i;s,24e, etjual to 47.75 per cent.; while the auvauces and discounts increased by £5,651,143, or hoc quite 24 per cent. Tne expansion in tlie advances occurred during tne last two yeais, o anu may toe atinbuled almost, if not entirely, to tne luck of shipping facilities, whien has necessitated ■ 1110 holding of produce lor longer periods than usual in the Dominion. Industrial enterprise and development have not been active during the years of war, and ordinary advances have probably reduced rather than increased, for, in the absence of iresli undertakings, the incoming proceeds of produce sold at high prices have enubled substantial rcuuctions to bo niado in liabilities. "The mortgage returns of the Dominion apparently emphasise this, for file mortgages registered during the year ended March 31 last were some .£2,927,000 less than for the year ended March 31, 1917. "It is important that we should guard against being, misled by these figures into the belief that all is well for the i future, and that the present happy position of financial affairs will continue , without interruption. It is well that we should recognise at once that this cannot be. The huge sums raised locally i by the Government for war purposes are i being largely , spent within the Dominion ' creating an artificial prosperity which' : cannot 'be expected to last longer than ' the expenditure of the borrowed money which is creating it; and when all this ', money no longer circulates, there will almost certainly be a great contraction of business in every direction. Prudent people will therefore anticipate and make ! provision for (his inevitable contraction, i recognising that war prosperity must \ necessarily oe temporary."