WELLINGTON NEWS

Hokitika Guardian, 17 October 1929, Page 7

WELLINGTON NEWS

MONEY CONDITIONS. (Special Correspondent ) WELLINGTON, October 16. The monetary conditions prevailin' in the Dominion at the present tin), as represented by the banking return: f ;r the September quarter are distinct ly good and yet it cannot be deniei that there bxists a want of confidence,, a hesitancy, a sort of wait-and-se< policy pervading the business community. Just what is the cause of thi it is hard to- detennine, but that il exists is beyond dispute. Interna trade though not bad is not as good a.‘ it ought to be, and the excessive number of jobless men is a reflection of tin want of confidence. It will no doubl disappear in time, but while that n some consolation it should not detei us from inquiring into the cause. 11 is to say the least a strange phenomenon. The banking returns show thai compared with the September quarter of last year all classes o'f deposits have increased by £3,143,061, that mean. l that banks have so much more money for financing trade of the country thai a year ago. In the period Government deposits have increased by £1,170,453, and this expansion was inevitable in view of the Government’s . policy o' spending money on capital works for the purpose of relieving unemployment. The money is available for thi? purpose, and the only question is as to whether it will be wisely expended oi frittered away. The demand for deposits or current account balances show the moderate increase df £623,311 and is quite satisfactory. The total of the free deposits shows a sharp contraction with the June quarter. This, of course, is a normal movement for it is in the early spring months that preparations must bo made for dealing with production. The time or fixed deposits show the rather large increase of £1,349,267 and the fixed deposits now amount to over £30,600,331, as compared with £20,941,663 in 1925, an increase of over £2 millions in four years, while the fret deposits in the same years decreased by nearly £3,003,000. It is the growth of the free deposits that is causing a lot of people concern. The money, of course, is not idle, for the banks are making the best use of it they can, but it is surprising that the owners of these free deposits cannot find batter use for their funds. It cannot be said that the country lias no resources to develop, for that would be stupid, how comes it then that money is locked up in fixed deposits when so much development work has to be done., There is here a nervousness or" want of confidence that cannot be explained but it should be investigated.

The advances increased by £4,596,150 as compared with last year, and tlib is to some extent a promising feature of the return. People do not borrow from the banks lightly. Some borrow have over-speculated in goods or securities and are in a tight corner. Others borrow to buy more goods to meet the demand of nil expanding business, JJqw many there are of both kinds of borrowers it is difficult to say, but if the former predominate then one can understand the dullness that some people complain about. The deposits that the banks take are their liabilities for they represent wliat is to all intents and purposes their borrowings from the public. Their advances and discounts are of course their lending rate and the' difference helps to build up their profits, -ne total of the deposits both fixed, and free for the past quarter was £54 millions and the advances aggregated £49 millions, so that it will be seen that the banks were unable to relend tlie deposits by about £5 millions, that, is they were unable to lend than amount in ordinary trading. That amount would he invested in gilt-edged security that could be converted jptc cash at short notice, so that if there happened to come a pressure for funds the hanks are in an excellent position to meet it. Although there is this apparent surplus of £5 millions of deposits the position from the point elf view of the hanks is now better than it was a year ago. From the point of view of the general public the position is also better. The spending power of the community is £729,407 better than it was a year ago. Trade last Christmas was generally excellent, and there nre indications that it will be ever* better this year. . The holiday travelling should also be better this year.