WELLINGTON NOTES.

Hokitika Guardian, 16 April 1924, Page 1

WELLINGTON NOTES.

BANKERS AND CREDITS. (Special to “Guardian”.) WELLINGTON, April 14. Discussing the quarterly banking returns a local banker expressed astonishment and regret that so few business people took the troublo to study the current statistics, for, in his opinion, there was much useful and profitable information to be gleaned from them. The banking returns, with their masses of figures were not attractive to the general reader and usually were passed over with a hasty glance. Very lew people tried to understand the functions of a bank and the work of a banker. The one was regarded as a. glorified pawn shop and the other as an inscrutable skinflint. A banker is simply a dealer in credit, this authority remarked, and was no different from any other merchant dealing in commodities. Credit is transferable like goods, and like goods credit was of various forms and called by different names. Deposits, advances, bills of exchange etc., were all different forms of Credit, and became the banker’s stock-in-trade. Credit implies confidence, and a. banker in making advances to a customer looks for security, but what is not generally knoivn, be looks

for character also. Many a customer lias l>een generously treated because the banker had confidence in him. A banker needs to be a good judge of character, and must bo aide to measure up his client on sight. TH'B BANKING RETURNS. Because it is very necessary that tho public should have complete confidence in tho banks operating in the Dominion, the law insists that every bank should publish at the close of each quarter the essential details of its affairs, tho figures being averaged. Publicity is as necessary for a bank as for a politician, but for different 'reasons. The politician needs it to keep himself in the limelight, the bank requires it to cultivate the confidence of the public. The Bank of England, the foremost hank in the world issues a balance sheet once every week, which is cabled to all parts of the world and appears in the papers as the “Bank of England Return.” The. big banks in England publish balance sheets once every month, so it will bo seen 'that publicity is quite a desirable tiling for a bank. The quarterly returns published by the New Zealand banks give practically nl'j the infonnatribn that would be given in a balance sheet, but in a different form. There are other institutions accepting deposits, fixed and

:it call, and making advances which should ho required to publish quarterly statements like the hanks. Tt would he in the public interest to compel them t o do so. WHAT THE RETURNS SHOW. The quarterly banking returns just | uhlish.ed show that the free and fixed deposits together averaged £47.033,293 luring the March quarter. This represents the credit borrowed by the banks from the public. On some of it, the fixed deposits, interest is paid. On the free deposits or current account balances no interest is paid because this credit is at the call of the customer and it must he returned on demand. The advances and discounts for the March quarter averaged £44,403.02!. This represents the credits granted by the banks to their customers. Thus it will be seen that the banks have borrowed from the public and lent to the public, but they have lent less than

they have borrowed to tlie extent o. £2,629,770. In normal times and under ordinary trading conditions, there is generally, if not invariably, an excess of deposits, but in times of financial stringency or a trade crisis the. pendulum swings the other way. Throughout the years 1921 and 1922 the advances and discounts exceeded the deposits, and in June 1921, the excess was as much as. £8,87-1.390. The services rendered the community bv'the bank during those two years were inestimable, and those services wore not based on sentiment, hut on confidence. Nevertheless the people are .under a debt of gratitude to the. hanks for the excellent services they then rendered. ECONOMIC CONDITIONS SOUND. The banking returns show that the economic conditions are now very satisfactory. In the -March quarter of 192*> the deposits exceeded the advances for the first time in nine quarters. In the succeeding quarter the excess of deposits was substantial. In the September quarter of hist year there- was again an excess of deposits, but. not so large as in June. In December the advances, exceeded the deposits by £3,399,217, and it may be asked why? Tlie December quarter is. when the producers are most in need of credit to pray for shearing and whatnot connected with primary production.

The produce is lnw-kcted- and the proceeds liquidate hank debts in the March quarter. Thus the debit of £u,fJ99,21 * in the December quarter was converted into a credit, of £2,620,770 in; the a! arch quarter, thanks to the substantial wool cheques, banners bad onlv to wait fourteen days after the wool sale to get their cheques and a heavy weight of wool was sold in the first quarter of the year. ‘ The whole thing is quite simple/’ the banker said In conclusion, “and the figures arc quite interesting and instructive 'when analysed and examined intelligently