BANKING REVIEW

Hokitika Guardian, 28 May 1932, Page 6

BANKING REVIEW

FINANCE IN AUSTRALIA

EFFECT OF POLITICAL TURMOIL

SYDNEY, May 24.

The Monthly Summary of Australian Conditions for April issued by the National Bank of Australasia notes that the broad general conditions of Australian affairs have not changed materially during the month under review. Our dominant need, a material rise in world prices of our main export commodities, appears no nearer. "The process of adjusting our internal economy continues, but the movement is relatively slow and advancement has been checked by the failure of the State of New South Wales to adjust its public finances in keeping with the Economy Plan adopted by the Premiers’ Conference in June last and by various legislative and social restrictions which are -retarding the restoration of economic equilibrium. The political atmosphere has been more disturbed during t-lie past month than since the last Federal election. In New South Wales, the dissension between the Federal and State Governments with regard to the recoupment of interest on the State debt paid by the Central Authority has had disturbing reactions on business enterprise-. (Since the foregoing wa-s published the Lang Government- has been dismissed.) In Victoria, the defeat of the Labour Government and a consequent election to be held on May 14th., while not so unsettling ais -th e anomalous condition in New South Wales, tends to divert men’s minds from -business and to lessen productive effort. These unfavourable factors are offset by excellent seasonable conditions and by the influence on current affairs of the many adjustments of effort, income, and expenditure made since the beginning of the depression. Also, the great part of the people is growing accustomed to the altered conditions, and a new confidence is being engendered by the -relative stability of the past year or so.

It is worthy of mention that, apart from the suspension of payments by the .State Saving's' Bank of New South Wales (and it has been taken over since and its depositors’ balances assured by the Commonwealth Bank), there have been hut few major failures among the large producing, trading, and financial houses of Australia. When the rapidity and extent of the collapse of prices an { ] the depth of the world depression are given due consideration, it would appear that the proved strength of our business structure- provided grounds for confidence in its ability to carrj through the present abnormal conditions.

.OVERSEAS TRADE, ij

Another indication of strength is provided by the returns of oversea trade for the nine months ended March. They show the recorded value of merchandise exports for the period at £73,338,000, equal’ in sterling to £57,361,000. When shipments of gold are added, the favourable trade balance —on a sterling basis—is £30,659,000 for the nine months. This compares with £10,135,000 sterling—favourable —for the previous relative period, and £9,100,000 unfavourable for the nine months ended March, 1930. It iis regrettable that imports have had to be contracted from £lO7 millions to £32 millions in the process. The recorded value of exports for the nine months is £lB millions less than for the 1929-30 period, but on a quantity basis a substantial increase has been achieved. With another year of high rural .production in prospect, large export surpluses may again be looked for. A relatively small increase in prices would be very useful. Banking statistics for the quarter euded March show average deposits held by the trading banks at £282 millions, and advances and securities at £268 millions. Compared with -the averages for the March quarter of 1931, deposits are £l9 millions higher, advances are lower by £l9 millions, while investments show an increase of £lB millions. Holdings of Austraian notes and balances at the central bank, at £sl millions, are some' £4 millions above the figure for the previous March quarter. Savings Bank deposits totalled £193.5 millions on March 31ist., which, though a million less than at the beginning of the year, is still slightly above the total of June 30th. last.