BIG FINANCE

Dominion, Volume 13, Issue 173, 17 April 1920, Page 9

BIG FINANCE

BANKING RETURNS SHOW LARGE , ... .INCREASES HEAVY GAIN IN DEPOSITS SUBSTANTIAL EXCESS OVER ADVANCES The salient features of the banking returns for the March quarter may, in com: parison with the corresponding quarter of 1919, bo summarised as wider;— Govt, deposits incrcated by W.SM Free deposits increased by 10 1 451.1!lSFixed depoEits increased by 1,365.050 Advances increased by •. .V. 42.K2 Discounts decreased by ZMM{ Circulation increased by .'. ' 1,?. ; 3'(B Coin and bullion decreased by .. 268.Ve6 'It will.be noted that there ia.an abnormal increase in the free deposits or current ncrount balances, and this is obviously due to the realisation o£ a larpre quantity of accumulated produce. Taking 'he.-. .three, classes of.deposits by themselves; the,comparison is as,under:— Jtarch, 1919 March, 1920 inc. Deposits. £ .-6 ,-C , Government 6.055.841 8.743.045 667.204 Free 24,353.631 34.814,896 10,4^1.215 .Fixed 14,485.145 16,850,195 ■1,365,050 46,904.657 59,408,136 j2,503,469. The-banks nTe liable to the rniblta' and the Government for a very lnrije ■Him. Large as is the amount at credit of cur : rent accounts, it is probably not oxcessivo. In view of the fact that owing M> rit-ing prices' more "apit.il is required for carrying on trade and commerce, and, further-' more, large ,bimds must in the near future be paid q.way for necessary commodities that ; qannot as yet bo obtained in adc-' quate quantities, and which are tadly wanted In the country.' All tho banks shared in 'the increase in the free deposits, as the table appended chows:-'-

'.■ . March. 1919 March, 1920 Inc. Bank. £ £ £ New Zealand 11.556.213 16.179.f67 W»WM Union 3.264.249 4.497,173 1,932,924 N.S Wales .... 2,914.666 iW.(O7 \.S%W>A Australasia.. 2.698,780 3,776.178 1,077393 National 3,586965 5,439.362 1,85?,.397 Commercial 342,783 686,909 344,121 _ ■ > 24,363,681 34.814,8% 10,451.215 The increases are nronortionatelv distributed, showiiiE that the eeneral"body of bank customers have improved- thoir. crpditß. The-fixed deposits show an expansion of not Quite 10 per cent, ana only-one institution'has reduced its liability in this reßpect, as the table appended shows:— ' March, 1919 March, 1920 : Bank. . £ • £ £ jew Zealand 7.157.547 8.080.445 '922 598!™-. &KS. ,- J-WJ.IJB ■ 1,755,778 ir.c A.S.Wales ..2,273.354 2.453.294 214,950inc Australasia 1,098,256 1,076,674 21.582 "gc National _ 2.127,892 2,293,692 .165 800 no Commercial ,120,968 155.312 3Winc 14,485,145 15,850.195 1,365.050"i«c ;n^' w J, th °- I . e 'Aggregates of the fixed 2?wwe? e de P° 6l ' 3 f ? r the March' carter tif each year, beginn ng with 1914 iJio position is disclosed.as under: u v." '" Fi «d Total March ■ deposits, deposits, deposits. ; quarter. £ j £ ■" \l\i .-■-• %'RI-V,l ".SHW 24,030,250' "}5 ,15,958,732 10,870,507 . 26,829 239 9 6 ....... 19,091,949. 12,182,104 31274053 H 20.970,702 13,385,838 343565 0 "18 21,614,302 13,891,196 35,505498 ■ 1919 ....... 44,363,681 . 14,435,145 38,843,826 1920........ 34,814,696 15,850,195 ' 50,665,091 As compared with ,1914 the total deposits nave, more than doubled, but the gain is practically in the free deposits, which have increased by more than 160 per cent.' The fixed deposits have increased by £5,290,716 in the six years, or just about 60 per cent. In tho five years, 1914-19, tho increase in-the deposits was £14,800,000, or roughly an average of £3,000,0C0, while in the past year the gain is nearly £12,000,000. and tin country has yet to feel tne benefits of. mis enormous augmeut-i----tipn.of'credit.' In Britain the expanded bi-iuii hito Unen useu Hjv speculative investments to. A large extent, and the banks have become alarmed. Investments have been mostly in cotton and shipping shares, and these are the two industries that are bound..to. exhibit diminishing .profits, in the near future. In New Zealand and Australia 'speculation has been going on. in-certain classes of shares which at present prices show a very small return. But liiure uoub hut appeal- to uu any aanyer of a speculative craze overwhelming the country. Wo are in urgent need of many commodities,- and the abundant 'credit must bbfiiseaVin 6e'cm-ing these'goods. : Since' l thei'e"has been such an'abliorraal increase in the deposits it is not surprising to find that, the demand for accommodation has been very moderate. The increase, as compared with a year ago, is shown in the table appended:-

• . ; iiarch, Jiarch, 1919. » IS2U. Bank. £ ' £, ■'.£' -N. Zealand... 14,781,838 14,2w,449, 52i,0b'9 dec. ijnion <!,t,v.,0i4 4,219,416 'xu,tn'i iuc< N.S.W' ' ifii't,M 3,002,t<)/ l'ii.la/dec. Australasia... 0,'00,714 0,0«,1Y4 i'RvJW) inc. National ...:.. 4,246,493 4,48/,IH 240,626 inc. Commercial iM.yxl m,w) 4o,wj dec.

... ~-, ' , 50,719,032 50,761,864 42,82;! inc. The discounts have shrunk Iroin £1,484,612 to £1,2M1,188, ana appear to be a natural vuoreiaent m view oi tne expanded-.credit. ''tha uiscounts and advances of the llurcii quarlor. ioi each year l'rom 1914 ihow ad ■under: ' '. ■ ; March .' Discounts. Advances.'- Totals. . quarter. '■' ■ £ £ . £ IVI4 ....... 2,017,107 21,649,643 23,666,750 1-Jl'S 1,634.4111 22.11)6.144 23,7«U«2 1916 1,457,655 22,246,237 23,733,693 \ij.i - H/jWij^OU l-jiii 2a,ifti,'icii w,;i7,««j 1919 ........' 1,464,612 30,719,032 32,203,644 "1920; .-.....-,. 1,560,188 30,761,654 32,042,042 Iu tiie six years the advances and discounts have increased by the moderate sum of. £8,375,292. Taking tho fixed and free deposits together, aud the advances and discounts together, the difference between, the, two snows the growth of the liabilities ol the banks to the public: ' Excess of March' Deposits. Advances.' deposits, quarter. . ' £ £ ' £ •'' 1914 24,030,250 23,666,750 363,500 : ULi 20,«y.M9 • 3,obs,v/ 1916........ 31,274,053 -23,733,892 7,540,161' UU .'. 3<l,.reCi,Mll 2;.w.,Vi0 o.ooi.uiu 1918 .- 35,505,498 29,317,096 0.187,602 1919 ....... 38,548,820 32,2)3,644 6,645,102' 1920 50:665,091 32.042.042 18,623.049 The banks have a plethora of loanable .credit, and since tney cannot nud an outlet for it in New Zoalaud they must seek other ; fields, and that is probably what, they arc doins. The aggregate assets for the .past quarter total £50,096,529, while the liabilities .amount to £67,659,576, ■ a' difference of £17,563.047, which prnctic-. ally corresponds with tho difference shown above. The circulation and the metal reserve totalß compare as under:— Note Coin and ■ March. . circulation, bullion; . quarter. ■ £ £'•'.' 1914 1,666,939 5,317,861 1915 ; 2,639,585 6,420,659 1916 3,171,553 7,120,854 ■ 1917 4,637,451 - 7,863,635 . 1918 5,915,529 7,984,188 1919 6,512,191 8.075,999 1920 7,765,559 7,807,213 Tho' circulation Bhows an increase of £1,253,368, arid the coin and bullion a shrinkage of £268,786. The volume of the note circulation indicates inflation, and no doubt there is a certain amount of it, but from tho amount shown for the past quarter mu6t be deducted £1,212,994, which is held by the banks, and therefore not in circulation, and allowance must alsO ba made for gold coins having been replaced by paper money, and thero must be further allowance made for the high prices of goods necessitating poople carrying more 'pocket money.' If these deductions are mado the inllation would bo comparatively slight. The- returns as a whole as an indication or barometer of the economic conditions read remarkably well, and we are probably on the peak of the curve of war prosperity/ • ■•