WELLINGTON NEWS

Hokitika Guardian, 16 April 1927, Page 2

WELLINGTON NEWS

THE MONEY BAROMETER. (Special to ** Guardian.”) j, B WELLINGTON, Apjil 13. 1: Tho quarterly banking averages which have just been published disclose j a very unsatisfuctoiy position, and p givo emphasis to the predieition of y Alt- H. Buckleton, General Alanager of ! the Bank of New Zealand that the ( country is in for a lean year. Ihe p banking returns show that the free de- ; j posits or current account bahinces have contracted by £2,425.073 as compared j with it year ago. and these are the j deposits against which cheques can he v drawn, that is they represent spending power. On the other hand advances have increased by £2,566,88(5, and while, in 1923, 192-1 and 1925 the deposits exceeded the advances, and by ' as much as £6,1.0(5.960 in 1925 which _ was a prosperous year, in 1926 the j advances exceeded the deposits by £982,(562, and in 1927 the excess was as much as £5,271,906. There we have tut indication that the imports have been in excess of our requirements, in j effect there has been over importation, arid the borrowings from the banks ‘ have been for the purpose of discharging foreign obligation.-. Another au- 1 verse feature is disclosed in the note ' circulation. This shows a contraction j of £227,301 as compared with a year 1 ago. Tile note circulation of course represents tile money in the pockets of the people and available for immediate expenditure, and that they have less in their pockets now than last year shows that the economic eondi- ; tioiis have c’.tuiged materially. It is obvious that if the pressure on the banks for accommodation continue-, they will be obliged to raise the overdraft rate, following the slump of 1920-21 the banks were called upon to advance' considerable amounts, and they were forced to ration their customers. The facts show that we have been living beyond our means an 1 must now ]mll u)) and go easy oil expenditure. But this going easy means saick trade and unemployment. Those who are ready to believe what is easiest, and it is easiest to be]ieve ..KM life is an easy business, believe that the present depression dm not last long

and refer to the fact that the country recovered from the slump of 1920-‘_'l very quickly. The previous slump was due to over importation and it was a .simple matter to cut down the imports, and this arfis clone somewhat drastically. Produce prices chopped a little but they soon recovered because the whole world was working cm a paper or inflated currency. Things are quite different now. It is the drop in me prices of our primary products tit at is the cans’j of the trouble. Because of that drop and the curtailment ol purchasing power, our normal volume of imports were found to be execsst'. e. imports aie being reduced sharply. I '-t there is no chance of produce prices advancing because such prices are now on a gold basis which avas not the- cast in 192 C-21. The problem t:> be (Kelt with is quite a different one and may be briefly stated its “make production pay.” To do this costs of production must be cut down, and in that there is contiled quite a number of polß-ico-commercfal economic problems. AAMint is lacking at the present moment appeal's to he sound leadership in commerce and in politics. That, leadership may yet be tortaeonnng. SIX MONTHS’ TRADE.

Ear Hie month of Alkrcli the cxpo.ts from the Dominion totalled £6.450,442, which contrasts with £6,895.092 tlie exports in 1926. there was thus a shrinkage of £444.5C0. For the three months to Alarch 31 the exports were valued at £16.(571.033. against £16,264,270, show_ inj/,,,1 increase of £406.763. In the previous or December quarter the fig tires were £7,928.655. against £ll,trot,\656. a decrease of £3.138.001. Thus for the six months of the produce year the exports totalled £24.399,088, against £27.330,926 in the corresponding six months of the previous year, u decrease of £2,731,238, which moans that the national income has shrunk by the amount stated. AVith respect to imnorts, in the December quartet tho total was £12.308,895, against £14,190,950. a shrinkage of £1.882.055, and in the March quarter the total was £11.995.879, against £13.672,772. a decrease of £1.676,893. Thus for the six months to Alarch 31 last the imports aggregated £24.304,774 against. £27.883,722, the shrinkage being £3.558.948 which is very .substantial gild very satisfactory from the- point ol view of restoring the trade equilibrium but on the other hand the shrinkage in the imports will affect the domestic trade, as wholesalers and retailers will have so much less merchandise to handle, and turnover and profits must therefore contract. !he balance of trade for the six months is favourable or the exports aggregated £24,599,688, and the imports £24,304.774, so that there was an excess of exports of £294,914, while for the corresponding six months of the previous velar the imports were in excess of the exports by £552,796. The position is better to-day than it was a year ago, it is nevertheless still unsatisfactory, and imports will have to be further reduced and substantially.