WELLINGTON NEWS

Hokitika Guardian, 15 October 1925, Page 4

WELLINGTON NEWS

TJIE ECONOMIC POSITION

(Special to “Guftrdirji”.)

WELLINOTOX, October 12. Evcrv tlirci; months those who cure to look into tin; matter have an o|>j.'ortanity of getting a grasp oi tie economic conditions jircvailing in the Dominion. r llie banking returns are published i|iia rterly. This is not a voluntary gesture on the part ol tlie hanks hut a requirement ol the law. T!ie hanks are compelled to send Hi 1 he Treasury at the close of each quarler a statement giving t |„. averages for t| ;e quarter, and these returns give a verv accurate relloetioii of the ecoiioi]iie conditions ruling. The object of i.his puhlicity is for the protection ot tin: oulilie, and there are many who contend that other concerns that aeci.pi deposits and make advances .fiotild also lie compelled by lav L’ siihinil returns to the Treasury. However. reverting t" the hanking returns ■or the Seplemher quarter tile figures reveal a verv satisfactory state ol allairs. The elfeets of the slump have I wholly dissipated, and the eottntry i- now in what might. he termed a normal state. Some may he eiirioils to know wlial set of banking figures disclose this. If it is home in mind that hanks deal in credit, that is they are credit merchants —-the hanks hoth horrow and lend. All the deposits thev hold represent borrowed money. The free deposits or current account balances are in the nature ol totnporurv loans, that may he called in at ally moment hy the lenders. In practice it is found that only in times ot stress is anv appreciable amount called up by the lenders, in normal times the withdrawals are itisigulicaiit. The fixed deIHi.il.-, are of course a favoured method of borrowing, donosits must lijivl* so ini* ivlntiuii tu tht* otlior clmss of deposits. The lixed and free deposits represent what the hanks borrow from the public. In the September quarter the hanks borrowed I ruin the public on tree and lixed deposits a total of £ 17,T011.-I"Jo. and lent to the public in advances and discounts

IM 1.!17u.31i11, sn that it will he seen that the hanks found profitable investment for nil the money they borrowed from the public except about L"2.i iS.Iltio. which is the excess of deposits over advances. Ibis is a normal state of affairs, for an example ot abnormal conditions we must go hack to the September quarter ot lb-1. In that quarter deposits totalled L 1.1,1 to.titiJ. and advances C I8,88!).li0!>. that is the advances exceeded the deposits by L'1.593.!) Mi. The community was in pawn to the hanks who were ill a position to exercise pressure. Ihe hanks need not have overlcut to the public, hut being competent readers of the linaaeial and trade barometers, they came to the conclusion that the slump was a temporary affair, and that many of those who were lloundering required a little help and would soon regain stability. And events have proved that hankers were quite right. 'I he hanks did not escape losses tail on the whole the slump was overcome without any undue distress and not w ithout profit to the hanks. Ihe economic position of the Dominion to-day is sal is factory but no sane financier would assert that the conditions are sound. There has been far too much borrowing on the part ol the municipalities, and the Government; end the nionev so burrowed is not always spent judiciously. The expenditure ol borrowed money tends to give a fictitious air of prosperity. NEW ZEALAND EXPORTS. The exuorts from New Zealand (lurine the month of August were valued al L 2.479.883, as compared with L'2,384,505 in August, 1921. an increase of C9S.TBT. The exports for the »■ itillt eionllis to August ill. were valued at L I A.'l-T.T.71 a- a gainst CTs.ri7.o7s in the eorresjiimdiiig term of last. year, an increase of C 1.208.135, equal to about Rt.l ner cent. I hi- siibslaulinl increase is mainly due to wool, the exports for the eight mouths being otto.tilth hales. valued al LM5.500.- ■ I as compared with opt I, Mi I hales, valued al Ll2,!'.' i 11.315. the increase in value being £2.870, 135. notwithstanding a decrease of 15.239 hales shipped, ■file export of beef during the eight months were valued at Col I ,592. against Coi.icl.llO in the corresponding period of last tear. Lamb Cti.231.231. against L'o. olift,o Ist ; mutton £2,300.077 ugain-'t Cl.rO'i.-->l)7 : sausage skins V-J.YsS. 102, against £199,195 : calfskins £82.817 auaiust £03.229 : hides £535.111, attains! Cfi7M.f>7H; l abbitskins £503.70!) iie.ain.st £30.5.787 : wool led sheep-k ins Clot. TOO. against £194.554: sheepskins, w ithout wool, C1.!75,30u, against. C1.(132,2 Hi. the increase in the latter case being due to the higher prices as the number of skins exported was less than last year. Sheep ami I heir preduets have been mainly responsible lor the expansion in our export s, tint we cannot expect this to teutinue. it can lie said definitely that wool is lower iii value by pence per lb. That will affect frozen mutton and lamb and sheepskins, and the next year's export returns may show a serious contradiction in volume ovine to the drop in values.