Hokitika Guardian & Evening Star WEDNESDAY, JANUARY, 19, 1921 THE BANKING RETURNS.

Hokitika Guardian, 19 January 1921, Page 2

Hokitika Guardian & Evening Star WEDNESDAY, JANUARY, 19, 1921 THE BANKING RETURNS.

The published banking returns for the December quarter give on the whole cause for not a littlo gratification at the general outlook. The pessimistic view issued in some quarters were probably timely from a precautionary jioint of view, but the figures reveal rather a hopeful general situation, indicating the Dominion is weathering the situation without any very material financial discomfort. The financial aspectreveals a rather buoyant condition, and the situation is indicative of the country holding its own with comparative comfort if the primary products can he put on the market with any celerity. Both dairy products and meat promise to be in a fair way to reach good average values, and only the wool market would improve, the outlook might be regarded as roseate almost. During the past, period the bank deposits both free and fixed have increase roughly by four million, which in view of the slackening off of the Imperial payments for produce may be regarded as satisfactory. Free deposits stand at a high figure, indicating a good deal of free money in the country, which is a satisfactory feature. It is when we turn to bank advances and note circulation that the general situation is not quite so attractive. Advances have jumped up over fifteen .millions compared with the figures of a year ago, which is indicative of the heavy importing which has been going on of late. Prices, too, have advanced, and added to the call for extra banking accommodation. In 19ip tho country had a, heavy surplus of nearly thirteen millions and a. half by'way of deposits over advances, but last year the figure was only two million and a third. Omitting the year 1919, tho excess of deposits over advances is in itself satisfactory, especially compared with tho like periods of 1917 and 1918. In any case we may take it that the untoward lesson of 1920 in the matter of over importation will have good effect, and that generally now there is a slackening off of the import trade so far as overflowing stocks are concerned. This being so, the country has a chance to recover itself. Restricted buying and increased exports would tend very quickly to retrieve the financial position, and this necessity is generally un dorstood now in banking and trading circles. I lie two matters of deposits and advances in banking busihess regulate the supply of money, and tluj importance of maintaining a clear surplus is self-evident. No less important is tho note circulation, and herein there is a weakness which requires remedying. According to the returns the note circulation shows a surplus over the coin and bullion in the banks, and that excess will grow immediately because there is permission to increase the note issuo to cover loan investents and advances against wool purchases. In 1919 money was very plentiful as a result of tho salo of produce abroad, and prompt payment for some. That source is tapering off rapidly, and the position was made more stringent by the overimportation of goods. It. will be necessary now to get produce away to the markets as rapidly as possible. The country needs all the credit it can accumulate through that channel, which spells more and more production, while the situation is not necessarily alarmin::, though it i« a.::!) as to invoke caution in business and a general conservation of funds. Economy needs to be practiced generally to help in the adjustment of money balances, for the position requires to bo made as strong i as circumstances will possibly permit to ! avoid undue stringency.