WELLINGTON NEWS

Hokitika Guardian, 19 April 1929, Page 6

WELLINGTON NEWS

BANKS FLUSH OF MONEY

(Special Correspondent.)

WELLINGTON, April 17. The banking returns for the March quarter are decidedly interesting for they disclose a great many features that should have considerable importance to the business community. The oiie fact that stands out clear and distinct from an analysis of the figures is that the banks arc amply provided with funds, indeed they are flush of money and at the moment cannot find profitable outlets for it. . It must be remembered that banks borrow from the public as well as lend to the public, indeed it is the function of a bank to collect from one section of the community and lend it to another. The deposits whether they are free or fixed, demand or time deposits, they represent borrowing hv the banks from the public and the bills discounted and overdrafts represent the lendings of the banks to the public. The average of the free deposits for the March quarter was £25,936,743, which contrasts with £24,482,151 in the March quarter of last year. There was thus a gain of £1,254,592. The fixed deposits aggregated £29,608,752 as against £25,476,144, an increase of £4,132.608. The aggregate of the free and fixed deposits is £55,345,495, as compared with £49,958,295, an increase of £5,387,200. which means that the community has so much more money to its credit than a year ago, and that in itself is ail indication that our overseas trade has left us with a substantial credit balance. While this feature of the banking returns is very encouraging there is another aspect which is rather disappointing, and it is the fact that the ratio of fixed to free deposits is excessive. In the March quarter of 1925 the free deposits totalled £29,765,000 and the fixed deposits at £20,131,000 —the difference being over £9.000,000. In the March quarter of 1926 the free deposits drooped to £26.865.000. hut they were still substantially in excess of the fixed deposits. which amounted to £20,436,000. The figures for March, 1927, show a further decrease in the free deposits to £21,440,000 and a further increase in the fixed deposits to £21,090,000. The free deposits were however substantially in excess of the fixed deposits. In the quarter just ended the free deposits. as already stated, totalled £25,736,000. and the fixed deposits £29,608.000 or £3,872,000 more than the free deposits which is a complete reversal of the position of two years ago. in 1927 the Tree deposits were 53.34 per cent of the total deposits and the fixed deposits 46.66 per cent. Now the position is that the free deposits amount to 46.67 per cent of the total deposits and the fixed deposits to 53.53 pet cent. Why this reversal? People with money if they cannot find suitable investment for same or if they have no confidence in the economic stability of the country put their funds In the care of the banks, and it may he said that their funds, their confidence and their optimism go into cold storage. It cannot he truthfully said that there is no scope for investment in this young dominion, and one is driven to the conclusion that it is lack of confidence that has driven money to shelter in the banks. That is the feature revealed by the figures, but if we make a further analysis there is a rosy side to the picture, an indication that confidence is returning.

Tn the December quarter 1928 the free and the fixed deposits together amounted to £51,601 ,"106 and at the end of the last quarter they totalled £55.345,495, an increase in three months of £3,684,089. Instead o*f the hulk of this money going into fixed deposits as has been the recent custom quite a different move is to be noted, for the bulk of the money is held in current account, the actual figures being

Added to free deposits £3,550.995 Added to fixed deposits £127,094

£3,684,089

'that clearly indicates returning confidence, and it seems to be the psychological effect of the change of Government. This, of course, may he an civ foneous view, but it is singular that in the four months that the Ward administration has been in power that there should be this welcome change. It is probable that the repeated declarations of the Cabinet Ministers that Government interference in business would cease, and the announcement that thcBoard of Trade Act would be repealed have given to capital a more hopeful outlook. The banking figures show that the spending power of the peoph is greater than it was a year or even two years ago, the figures £32,10/ ,637 against £30,858.819 last year and £31.044,459 two years ago, so that the economic position and monetary conditions are more hopeful now. If during the coming session of Parliament the Government afford convincing evidence that private enterprise is to he allowed full and free play business generally will improve.