THE BANKS AND THE MONEY MARKET.

New Zealand Times, Volume XXXIV, Issue 5616, 29 March 1879, Page 3

THE BANKS AND THE MONEY MARKET.

(From the Christchurch Press.) The extraordinary scarcity of money in the colony at the present time is a subject of; the deepest interest to the whole community, and a variety of speculations are afloat as to the causes which have operated to bring this state of things about. Amongst others, the present position is ascribed to the; real or supposed withdrawal of bank capital to the Australian Colonies, and it is in many quarters roundly asserted that several of the leading banking institutions carrying on business both in New Zealand and also in Australia have largely curtailed their accommodation here in order to extend it in the other colonies. ' The banks, generally, for some reason or other, are blamedas the fountain of all evil, and the impecunious ' are hot slow to accuse them of having encouraged speculation,'and then done their best to cause a panic by a sudden contraction of their advances. The best and only.means of arriving at a right conclusion as to. the facts is to turn to the bank returns. Those for the quarter ended December 31st have recentlybeen published. We are,.therefore, in a position to compare them with those of the previous quarters. We shall first confine our remarks to the state of affairs which, as shown by those returns, existed on September 80th and December filat. First, as regards the note circulation and deposits,, we find that there was an aggregate increase for the quarter under this head of £138,032, distributed among the various banks as follows : Bank of New Zealand, Increase .. .. £112.395 Union -Bank, increase „ . . ■ .. .. D.AI7 New South Wales Bank, decrease .. .. t 7,039

Bank of Australasia, Increase 10,517 National Bank, increase .. .. Colonial Bank, decrease.. .. .. •. 49,716 The next thing to notice is- the condition or the coin reserves on December 31, as compared with September 30. We find that they have been strengthened during the interval ,by £49,079. It is a noticeable feature, however, that while all the local banks’ reserves are less, all the Australian ones show large increases. The figures are as follow : ; Bank of New .Zealand, decrease .. .. £68.291 Union Bank of Australia, increase .. .. 82,.*>28 Bank of Ne-w South Wales, increase .. .. 34,126 Bank of Australasia, increase 19,051 National Bank of New Zealand, decrease .. 13,319 Colonial Bank of Now Zealand, decrease 6,016 We now come to that part of the return •which deals; with the advances = which have been made by the various banks in the colony to their customers, and we find that during the quarter ending December 31st they had lent the sum of £935,816 mere than was outstanding on September 30th. The increase is 'spread over the whole of the banks except the Colonial, which alone showed a decrease, but a very trifling one. They stand thus Bank of New Zealand, increase .. ' ..£737,056 Union Bank of Australia, increase .. .. 65,183 Bank of New South Wales, increase.. 71,524 Bank of Australasia, increase .. .. 35,311 National Bank of New Zealand, increase 98,599 Colonial Bank of New Zealand, decrease . : 11,857 From the above figures it will be seen that the Bank of New Zealand had increased its advances to the public during the quarter by the large amount of £737,056, and the National Bank by £98,699. The Union Bank of Australia had increased its advances to the public by £55,183, the New South Wales by £71,524; and the Bank of Australasia by £35,311. And as these three banks had strengthened their coin reserve by £82,528, £34,126, and £19,051 respectively, it is evident that at that date there was no* foundation for the report that they had been drawing in and sending capital from'New Zealand to Australia. Turning to the operations of the whole of the year , 1878, we find that, as compared with those of 1877, the banks had largely increased their advances. The figures are • Bank of New Zealand, increase .. .. £1,543,133 Union Bank of Australia, increase.. .. 201,820 Bank of New South Wales, increase .. 110,375 Bank of Australasia, increase .. .. 147,950 National Bank, increase .. .. •• 475,159 Colonial Bank, increase 313,397 £2,794; 337 These figures show conclusively that, so far from the banking institutions of the colony having Contracted their advances, they had during the year ended December 31st last increased them by the enormous sum of £2.794,337, Under such circumstances any curtailment must have taken place within the last month or six weeks, and it is incredible that such action could, in that short period, have resulted in the present absence of‘ money throughout the colony. The next quarters returns, however, will effectually set at rest the doubts, if there are such, even on that point. For the present the returns to which we have made reference completely dispose of the allegation that the present scarcity of money is duo to the policy of the banks generally, and the Australian banks particularly. We must look elsewhere for the causes which have produced so unpleasant and unfortunate a condition of affairs.