WELLINGTON NEWS

Hokitika Guardian, 15 January 1932, Page 7

WELLINGTON NEWS

THE BANK NO POSITION

f (Special Correspondent)

WELLINGTON, January 13,

Tile economic position at the close of the last quarter as revealed by the banking returns are normal’ for the present abnormal situation. The demand on free deposits declined by £2,452,401, as compared with the December quarter of '1930, while the time on fixed deposits increased by £1,860,038 The aggregate of the free and fixed deposit,, for the past quarter totalled £50,781,933 as compared with £51,376,396 at the close of 1930, a decrease of £592,663, which means that the customers of the banks have not only not been able to save anything but have again drawn upon capital to keep going. Compared with 1929, when conditions were quite good, the shrinkage in the aggregate of the deposits is £2,575,700, and this loss to the community has natuihiitly beefi severely felt. A striking feature of the deposits is that there has been a steady ■and persistent increase 'in (the fixed deposits, while the free deposits have as persistently declined. In the past two years the fixed deposits have expanded by £4,007,356, while in the sanie period the free deposits decreased by £6,583,056. This is not a very pleasant picture for it shows that those who have funds available for investments have not sufficient confidence to invest, but are following the policy of “safety first” and hold their funds on fixed deposits with the banks. Of course the use of the money i,s not lost to the community because it is not being invested by (the owners, for as tong as it is in the keeping of the banks it is being used by those institutions in helping importers and exporters and the trades and industries of the country.

There has been a substantial falling off in the volume- of the advances and discounts compared with last year when the figures were at their highest in the past five years. The aggregate of the advances in the past- quarter was i£51,016,781 as compared with £54,382,740 in the December quarter of 1930, a decrease of £3,365,967. This is a very substantial fall and was mainly due to the fall in commodity values calls for less finance. Immediately following the close of the war when produce prices and prices of property, labour, etc., were very high, the demand on the banks was very great, but then the deposits were large, nevertheless practically all the banks strengthened their capital resources by issuing fresh shares and as events have turned out this was a wise movement. The banks, throughout New Zealand and Australia have faced the strenuous times of the past two years in a very creditable manner, and although profits have beeh cilt they are till helping the people' to t'h<s Utmost; Shareholders of the banks are in a measure suffering frolti reduced divi= deads, but they will later got theil' reward, 1.1 auk slweg nr§ tv good vestment for the long run and u sound bank that is keeping its dividend down and its 'Strength up is the one to invest in, for it will surely increase its dividend distribution as the economic crisis has passed, and with bigger dividends the shares will bring better prices. The advances and deposits both show decreases. The banks depend largely if not entirely on the deposits tn making advances, and in the past three years the deposits have fallen far short of the advances. In the past quarter the advances exceeded the deposits by £235,748, but this difference was really moderate, for in the December quarter ol 1930 the advances exceeded the deposits by £8,099,352. The exces s of advances over deposits in the quarter just ended is entirely due to three banks, the Union Bank, the Bank of New South Wales and the Bank of Australasia. An outstanding feature and one that counts for the dudness of domestic trade in the marked curtailment of the spending power of the people. The barometer ot this are the free deposits ami the note circulation. In the past quarter these two items totalled £22,072,340 or £2,1368.887 less than in the corresponding quarter of 1930, and the £7,220,676 compared with 1929. It would be advisab.e to bear in mind that the figures refer to the past, and it does not follow that the future will continue dismal. The worst of the depression is really past.