WELLINGTON NEWS

Hokitika Guardian, 15 July 1925, Page 1

WELLINGTON NEWS

SOUND ECONOMIC POSITION

(Special to “Guardian”.) WELLINGTON, July 18. X.Z.’s economic position is very sound, or as one Wellington newspaper remarked: “The economic conditions are. as sound as the proverbial bell.” This very optimistic view is reached hy comparing the hanking returns for the June quarter with those for the corresponding quarter of last year. The hanks, as most people know both lend and borrow. \\ lien the hanks borrow the vulgar term of ‘‘borrow’’ is not used, hut the more elegant term oi “deposits” is applied. There are three kinds of deposits distinguished in the returns, and these are Government Deposits, deposits not bearing interest, which are the current account balances <>l customers, also referred to as free deposits, and the deposits hearing interest also known as iixed deposits. It is obvious that advances are "Imt the hanks lend to their customers. and the discounting of hills is another way the hanks have of lending. Government deposits may he eliminated from consideration, but the other two classes of deposits, which represent what the hanks borrow from the public, and the advances and discounts which rep resent the borrowings of the public from the bunks must have some relation the one to the other. As a general rule the borrowing ol the hanks exceed the total of their lendings, hut the excess in normal

times is not very great, hut there arc occasions when the relationship is very much disturbed. In the June quarter °t Rl2l, the year ol the great slump, the advances and discounts totalled £•1 I,ABo. ISA, while the free and fixed deposits combined amounted to £ l-i,oI I ,UPo. 'I Inis at that period the banks lent to the public £8,871.890 more than they borrowed front them. I hat was an exceptional time and the hanks placed a great strain on their resources to help their customers, and the sendees they rendered the community on that occasion should never lie forgotten. Furthermore it should he remembered that the assistance w"uld never have been lorlheoming had the banks been weak institutions. Some people seem to thunk ft hat because the hanks build up strong reserves that therefore they arc exploiting the public, which is absurd. We should rejoice to see the hanks strengthening their reserves and adding to their resources, tor it is only the strong institutions that can render help in times of financial stress. .But to return to the comparison. The position in the June quarter of 1981 was as had as von Id he. as the above quoted figures -how. Xow let us turn to the .June quarter of 192. A. The deposits, that is the amounts borrowed by the hanks from the public, w ore £s] . tOA.OAA. .-mil the ach alters or the amounts borrowed by the public, from the- hanks, were £ lA,9A->,i (iff, so that the public have lent to the hanks C* . ,80(1 more than has been harrowed from the Links, in June 1981, the public was indebted to (he banks to the amount of £8,871,890

min tin- public is- in credit to the ■'mount of .L'".027,80(). There lias thus heeu a complete reversal of the position in the short, space of four years and in flint period the savings, profits nr accumulations have exceeded i £16,000,000, and this tip]tears to justify optimism ami to warrant, the opinion that the country’s economic conditions arc os sound as a. bell. TUI' LOCAL MON'EY MARKET. ll.cause the kankinp; returns show n wry sound posiiimi with a la rye credit lialance to draw upon money is not cheap to the mortf'atfor. It is mu difficult to assign unod reasons tor (his. Luring the slump of l<)2ll-L'l laud values and particularly farm lands depreciated. or rather it should he said that the iutlation was s(|Uee;’.ed out of liiem. and there were liencv Insses, Tim mnralnrinm which ruled for ten years was another daimmiim factor, tor it sickened those who made a jiractiee el lending on nmrleiiec. That of investor turned liis nttcntioi; shares, stcieks and dehenttires, all ahsdlutelv safe and yieldine a elenr .V',, ‘ 1 vo o: income tax. ()1 intirsc money is to lie olitiiined on murteaee tn-dav. hut lenders demand (>■’., on a off 0 /, margin. and valuations are on a verv strict basis. 'I In- nverdraft rates at the hank-, mi lirst-clas,s accounts with ample cnlla t era is is (if 0 ,.. On chat lid securities the rales vary frntn to 10"... on live .stuck 8 to 10",.; S to 10°/ nil motor vehicles; |o°, mi motor cycles and tools of trade; crops; 0 to 10"., mi household furniture: S"/ on wool clips, and ahnilt 11°/ on pianos. I| cumes down to tliis that those with adeiimite security (n nlfer have no difficulty in ohlainine the advances at rea.sunaldc rates. There is however at

the present time a section of farmers mortgaged up to tin- hilt, who are in need of credit to carry on. and for the lack of this credit their lands are not producing up to capacity, indeed the land is depreciating in productive capacity because nothing is being spent on if. This is a very great economic loss and one that llu* country < aiiuot "'ell aliord. It G a wonder that the Government does not deal with this problem which i- one of national importance. Sun-ly it is possible lit Revise a scheme w hereby financial ns-

sislaiice ran be given tu these unfortunate farmers. These men probably have no security, or very little to offer, nevertheless it would pay the country to have the deteriorating lands restored to their lull producing capacity. and it is time that: some close and earnest attention was given to the solution of the problem.