The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, APRIL 11, 1927. THE FINANCIAL BAROMETEH.

Hokitika Guardian, 11 April 1927, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, APRIL 11, 1927. THE FINANCIAL BAROMETEH.

The banking returns are a very good indicator of the trend of business of the country, and the quarterly returns of the banks doing business in Xcw Zealand now published for the Deceinl>or period, give cause for pause and consideration. The revelations are not , wholly unexpected because there have I been many warnings, but it is well to have the drift realised in concrete terms, and this the returns certainly do. There is an obvious tightness of the money market and the knowledge becomes apparent that less money is going to l>e available. AYhen we diseuss unemployment and its unpleasant teatures, it is well to bear the bald j tact in mind, for it will help to appreciate the difficulty of the (I t veriiment in meeting tin l Dominion situation - a situation which in some measure has been created by the political trend of tilings—as witness the upshot of control methods and the restriction in trading, as tor instance the prohibition on timber export which prevailed for so long—long enough for New Zealand to lose a lucrative place in the Australian market. To return to the plain story of the banking returns, the figures for the quarter now available show the effect of the adverse balance of trade. Fluctuations in the trade balance arc always shown in the hanking figures a little later than they occur, and for some time now our imports have been in excess of our exports. This has had the inevitable result of decreasing deposits and increasing advances. For the year ended February 28th. 1926. imports exceeded exports by £2,962,170 ami at March 01st. last year bank advances exceeded deposits by £982.662. Tn the year ended February 2Stli. this year a further excess of imports of £2.115.05S was added, and the bank advances are now £5.271,995 in excess of the deposits. This is a clear indication of the urgent need for righting the balance of trade by an increase in exports and a curtailment of our imports, for until that takes place the banks’ available funds for lending will lie restricted and accommodation scarce. The March qunr-

ter usually .shows ihe hanks ruli'cr- re-plenish-0 by returns from rim rcali-a-tion of ihe season's produce, nod limitdeposits me usually veil in c\ei of advances \part from the last two (pinners onlv twice in ovm twenty years have advances exceeded deposits in the March quarter, and that was ill 1921 and 19.22. which was the last period of heavy over-inmort.at ion. (laving thus stated the situation and prospects, the usual comparative figures are given to convince as to the tightness of fhe money market. Tin-re is 110 question hut that the general position as disclosed by these returns niusi give cause for grave reflection. The community is leaning too heavily on ihe hanks and this must, he remedied. The remedy lies in reducing importation and working off present stocks of imported goods. This can he done and importation is alreadv being curtailed. The other part of the needed remedy is nil increase in exports, and though production could he increased, tin's depend- very largely on Ihe price- realied for our exports improving. At present wool has started to improve, hut. the outlook for daily produce and 1111 at i- still mu ertain. and we can only hone for improvement in these. However it anjiears 10 m. says a hanker summarising the position, that the situati in is steadily improving, ami it. is only a matter oi time lefure tilings will lie lighted. Though there i- a note of opt ini ism just expressed, the favorable result expected cannot be realised unless the liii.auria! house is set in order. What is being done to that end? In general the country is going full steam ahead hoping for something favourable to turn up. Wool has given some hopes of gain, hut dairy produce is still at a low figure, and with the stocks arriving at Home, and the summer season coming in there, it does not appear that, prices will lilt greatly. The muddle over control has caused ihe best period for prices to lie missed and it is not unreasonable to specula to that the banks bail some say in forcing the decision to drop price-control. The adverse balance was still growing when they stepped in. .Some millions wore lost through the deprecated salepriee. and if that condition prevailed, it meant adding to the adverse balance of over live millions already against New Zealand. It lias been calculated that the farmers lost over two millions by the hold up of lad lor at Home which was so much less money to pass through the hanks, accentuating the adverse balance As mailers are now revealed (here is the need and the occasion both publicly and privately in study economy in order to recover the financial position. The drift should not longer lie permitted, if a serious financial crisis is to he avoided.