BIG BANK ADVANCES.

Taranaki Daily News, 15 April 1921, Page 8

BIG BANK ADVANCES.

HEAVY DEMANDS FOR ACCOMAIOIIATION. ADVANCES AND DISCOUNTS INCREASE BY £20,000,000. REVIEW OF QUARTER’S FIGURES. The banking averages for the March quarter disclose clearly enough the financial tension that is being experienced in the Dominion at tfhe present time. Compared with the averages .of a year ago the salient features of the banking returns may be summarised as under:— £ deposits decreased... 2,443,641 Free deposit decreased 4,029,691 Fixed deposits increased 520,002 Advances increased 18,734,279 Disoeunts increased 1,670,020 Circulation increased 64,647 Coin and bullion decreased .... 144,655 It will be noted that while the fixed and free deposits decreased by nearly £4,000,000, the advances and discounts have increased by over £20,000.000, and apparently most of the borrowing from the banks has been for the purpose of financing imports, the values of which have been abnormally high. Examining the deposits in detail, we get the lowing:Mar., 1920. Mar., 1921. Deposits. £ £ £ Government 8,743,045 2,443,641 dec. Free * 34,814,896 30,785,205 029,691 dee. Fixed 15,850,195 16,370,523 520,330 inc. J 9,408,136 53,455,134 5,953,002 dec. The only increase is in fixed deposits, and the expansion under that head is a little more than half a million. Last year there were increases in all classes of deposits. The Government deposits were larger by £687,204, the free deposits increased by £10,451,215, and the fixed deposits by £1,365,050, and thes figures make the change now exhibited all the ipore striking. The free deposits of current account balances contracted to the extent of £4,029,691, and all the banks except the Commercial Bank suffered in this contraction, as the table appended shows:— Mar., 1920. Mar., 1921. S Bank £ £ £ N.Z. 16,179,067 14,729,044 1,450,623 dec Union 4,497,173 3/530,255 966,888 dec N.S. Wales, 4,235,667 3,604,123 631,479 dec Australasia 3,776,178 3,311,890 464,288 dec National 5,439,362 4,885,726 553,636 dee Commercial 686,969 724,132 37,233 inc.

34,814,896 30,785,205 4,029,691 dec

Bank advances make bank deposits, and although the banks have advanced £20,000,000 more than in the corresponding quarter of last year there is the actual shrinkage of over £4,000.000 in the deposits. Obviously the credits have been transferred, and that could only be to pay for imports. Merchandise has come in, and the credit has gone out, and the merchandise has somehow to be turned into cash, and therein lies the present difficulty of traders. Although the gain in fixed deposits is small, it is satisfactory as showing that where possible savings are being made. The movements in the fixed deposits are shown below: —

Mar., 1920. Mar., 1921. Inc. Bank - £ . £ £ New Zealand 8,080,445 8,206,708 126,263 Union 1,755,778 1,796,402 46,624 N.S. Wales 2,488,294 2,404,798 6,504 Australasia 1,076,674 1,125,570 48,896 National 2,293,692 2,527,394 233,702 Commercial 155,312 219,653 64,341

15,850,195 16,370,525 520,330

The movements in the aggregates of the free and fixed deposits for the March quarter of each year, beginning with 1914, are shown in the accompanying table:— Free Fixed. Mar. Deposits. Deposits. Total.

As already stated, the advances increased by or equal to about 60 peY cent.; this is an exceptional increase, and indicates the state of the money market at present. The figures of the several banks compare as under: —

30,761,854 49,496,133 18,734,279

Although the increase in the advances is regrettable because of the unfavorable inference to be drawn, the figures are a great tribute to the banks who have risen to the occasion, and have met the d.emflnds on them almost to the full extent their resources. Had they not S>ne so the position to-day would have beeif very serious. During the war the banks increased their resources, for mos?Df them enlarged their capitals, and in othef ways took care to add to their financial strength, and the country has had the benefit of this forethought. The banks Jiavd had to refuse the demands of many borrowers, for which they have been vi’llified inside and outside of Parliament, but bankers cannot lend beyond their resources and maintain soundness. It was very fortunate that the banks were strong enough to meet the extraordinary call for advances that has been made upon them. The discounts have increased by £l,670,020, in which all tins banks but one shared, as the table below dijmlosga;—

Mar., 1920. Mar., mi. « Bank. £ ~ " £ New Zealand 763,639 1,968,430 1,204,791 Lne. Union . 42,638 9.1,554 48,916 inc. N.S. w’ales 05,040 261,479 196,437 inc. Australasia 11-3,637 274,393 160,556 inc. National 198,090 204,564 96,474 inc. Commercial 96,944 5(9,790 37,154 dec

1,280,188 2,950,208 1,679,0-20 ipc.

The discounts and advances combined total £5'2,446,341, as compared with £32,042,042 in the corresponding quarter of last year, an increase of £20,404,299, which is an-abnormal increase. Taking the fixed and free deposits together, and the advances and discounts combined, the excess of the one over the other for the March quarUf Qi a series of years is shown in the table ioilowing:-™-

♦Excess of advances.

There is a big change as compared with last year, when the Imperial Government was buying wool and meat and dairy produce. s The note circulation and coin and bullion are given below:

The circulation shows the modest increase of £64,647, and indicates the inelasticity of trade. The growth in past years has been exceptionally large. There is a shrinkage of £144,655 in the amount of the coin and bullion. No importance can be attached to this, because the banks hold considerable amounts in legal tender notes. The position cannot be said to be satisfactory, but it is not critical or dangerous. A duty is imposed upon everyone to do his and her best to bring about an improvement, and to this end we must endeavor to increase production through efficiency, produce, only what is needed, consume only what is -necessary; maintain public confidence; encourage conservative investments; prevent abuse or over-extension of credit; practice economy; reduce cqst of living; and put an end to Bolshevism in this country.

qr. £ £ £ 1914 13,475,771 10,554,479 24,030,250 1915 15,958,732 10,870,507 26,829,239 1916 19,091,949 12,182,104 31,274,053 1917 20,970,702 13,385,838 34,356,540 1918 21,614,302 13,891,196 35,505,498 1919 24,363,681 14,485,145 38,848,826 1920 34,814,896 15,850,195 50,065,091 1921 30,785,205 16,370,525 47,155,730

Mar., 1920. Mar., 1921. Inc. Banks £ £ £ New Zealand 14,260,449 22,699,110 8,438,661 Union 4,215,476 6,413,679 2,198,203 N.S. Wales 3,552,667 5,726,077 2,173,410 Australasia 3,842,074 5,755,127 1,913,053 National 4,487,119 8,024,485 3,537,366 Commercial 404,069 877,655. 473,586

Excess of 1 Mar. Deposits. Advances. deposits. 1 qr. £ ' £ £ 1914 24,030,250 23,666,750 363,500 | 1915 26,829,239 23,740,562 3,088,677 1916 31.274,053 23,733,892 7,540,161 1917 34,356,540 27,694,930 6,661,610 1918 35,505,498 29,317,896 6,187,602 1919 38,848,826 32,203,644 6,645,182 1920 50,665,091 32,042,042 18,623,049 1921 47,155,730 52,446,341 *5,290,611

Coin Mar. Circulation. and bullion quarter. £ £ 1014 1,666,939 5,317,861 1915 2,639,585 6,420,559 1916 3,171,553 7,120,854 1917 4,637,451 7,863,635 1918 5,915,529 7,984,188 1919 6,512,191 8,075,999 1920 7,765,559 7,807,213 1921 7,830,206 7,662,558