BANK ADVANCES.

Globe, Volume IX, Issue 1286, 3 May 1878, Page 3

BANK ADVANCES.

Commenting upon the universal character of the enormous increase in the bank advances throughout the Australian colonies and New Zealand, the " Australian Insurance and Banking Record" writes:—"The complete epitomised record of the past six years, which we publish this month, reveals a financial expansion altogether unprecedented on this side of the Equator, and cannot be regarded without some misgiving as to the ultimate results when the inevitable brake comes to be forcibly applied. ... In strict keeping with its abnormal character, the year 1877 persistently disregarded all precedent to the end, and the final quarter shows an absolute increase in the advances in all six of the colonies amounting together to the large sum of £1,733,000, while the total increase in the liabilities to the public only amounted to £773,000, thus necessitating the employment of additional capital in this one quarter of £960,000. ...... The additional capital imported into the business of the Banks, and which necessarily includes deposits received in Great Britain, or other places beyond the colonies under review, large as it is for a single year's increase, falls short of the necessities by nearly half a million, which has been supplied by trenching on the reserves of coin and bullion. It is impossible that this process of expansion can continue much longer. There must be a period of recuperation, and when the enforced cessation takes place, the inconvertible character of the heavy advances on land will cause the pressure to bear with intensified force on the mercantile community and bring about a restriction of credit against which only the most wealthy and conservative firms will be able to stand

As probably more than half of the station properties in Riverina are owned by Victorians, it may be safely alleged that at least four millions of the increased advances in Victoria and New South Wales are caused by the undesirable and largely unremunerative purchases of land in Riverina, the proceeds whereof, by gravitating into the public account of the adjoining colony, tend apparently, but fallaciously, to increase the lending power of the Government bankers."