The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, JULY 19, 1930. THE BANKING AVERAGES.

Hokitika Guardian, 19 July 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. SATURDAY, JULY 19, 1930. THE BANKING AVERAGES.

The banking returns for the June quarter which have been published, and to a very large extent, reflect the economic condition of the country, do not make very satisfactory reading, says the Otago Times. They indicate, indeed, that the Dominion is passing through a period of financial stringency in which there is a definite need for caution and conservatism on the part of the business community and for the exercise of strict economy on the part of the general public. Among the more significant features of the latest returns are the very pronounced shrinkage in the free, or call, deposits in the hands of the several banks operating in the Dominion, and the marked expansion in the advances, which, for the first- time since 1D27, reveal an excess over the deposits. When the figures for the March quarter of the current year were published they disclosed the fact that the Dominion was being adversely affected by the fall in the prices of her primary products and was reacting under, the economic depression in Alls- J tralia; but there were, nevertheless, factors which could be regarded as i reassuring. In the intervening three j months some of these factors have largely disappeared, and the position to-day is manifestly less satisfactory than it was ait the end of March. During the March quarter the free de- ! posits in the hanks showed a decrease ' of £1,830,921, and while withdrawals j to this extent indicated a reduction j of the purchasing power of the people it was scarcely to be anticipated that those deposits would show the heavy reduction of three and a-half millions which was recorded during the quarter ended June 30th. In the March quarter the advances by the banks increased by the large sum of £7,271,-

832 as compared with the corresponding quarter of the previous year, whereas during the June quarter of this year they increased by £0,005,688 compared with the corresponding quarter of 1229. While these figures are slightly in favour of the quarter just ended they are, to some extent, offset by the fact that the banks were asked to accommodate the public to an amount which exceeded the deposits, excluding the Government deposits, by some £310,000. It may be assumed that the heavy exchange rate in London against Dominion importers has operated as a check upon overseas buying, and it would appear that the reduced increase in the advances', figures as compared with last year has been brought about by a diminution in the volume of overseas purchasing bv importers. As the next quarter is generally regarded in financial circles as the “leanest” period of the year, prudence would appear to commend to importers a con tin u a pee of the realisation of stocks held in New Zealand together with a restriction of importations to necessities. Jf this is not done it may be found by the end of September quarter that the banking position lias been further affected. One of the more satisfactory features of

the latest returns is that the Government deposits have shown an expansion of more than two and n-quurter millions, wliieh may, perhaps, be taken its.- art indication that the Minister of Finance is desirous of making provision, for the redemption of a war loan of nearly five and a-half millions at 4i per cent., free of income tax, which-falls',due in a few weeks’ time. This redemption, it may be remarked, will ultimately react to the benefit of the Dominion by bringing into the area of taxation moneys which were previously exempt from income tax, for it will be remembered that Sir Joseph Ward, when Minister of Finance, realised the necessity for attracting money on the most advantageous terms, and offered this concession to investors. While the latest banking returns cannot be viewed with equanimity, it would be well to deprecate any feeling of pessimism which they may ha ve . engendered. There are indications that during the coming export season the prices for the Dominion’s experts may to some extent be stabilised, though at a lower level than that which obtained prior to last season, and this may be expected to tend towards a readjustment of national finance and enable the country to live'-within the limits of its income. But it seems to be apparent that the time is coming when the reduced prices of our staple export commodities must bring in their train a realisation of the necessity for a reduction of the cost of living.