The Daily News. SATURDAY, JANUARY 14, 1922. THE FINANCIAL BAROMETER.

Taranaki Daily News, 14 January 1922, Page 4

The Daily News. SATURDAY, JANUARY 14, 1922. THE FINANCIAL BAROMETER.

Those Who take more than a passing interest in the welfare of the country , and its people, find a reliable basis for forming an accurate judgment on the economic position from time to time by studying, the bearing of the figures contained in the banking returns. These statistics constitute a fairly reliable data as to the state of trade, commerce and the financial position generally. It is not enough to merely grasp the idea that money is scarce or plentiful, for it has to be remembered there are many factors which exercise an influence that acts and reacts on the whole community, in good times as well as in periods of stringency. The first point that attracts attention in connection with the banking figures for the qu'arter ending on December 31 last is the continuance of the excess of advances over deposits, a feature that denotes that borrowing is still going on, though in the usual way of business, in order to enable the producers to carry on until the sale proceeds of their exports come to hand. At this season of the year these advances always loom large, but there are two main reasons why they should now show more unfavorably than usual. The first is due to the heavy liabilities of many farmers and others for interest, taxes and other outgoings, while the second is the result of lower prices for wool, meat and other produce; also of the heavy drain made on the banks last year, and the natural shrinkage of deposits that generally marks the closing months of every year. At the same time, the excess of advances would have been considerably greater but for the serious curtailment of advances on account of butter, due to the great fall in values on the Home market. It will be noticed there was only a comparatively small dhange as regards the fixed deposits, as compared with the previous quarter, a fact that testifies to the husbanding of unemployed capital available, for investment. It is the free deposits, which represent the ordinary trading accounts at the banks, that show a falling off of nearly two millions over those of tho previous quarter. This is to be expected in a period such as we have been passing through. That, there should be a decided decline in discounts — nearly four hundred thousand pounds—indicates that the banks are exercising caution in this direction, a course they are practically bound to pursue, and one that may be regarded as tending to promote stability. The returns also indicate that the heavy importations of last year have ended, and that traders are wisely reducing their stocks at lower prices than have hitherte ruled, thereby lessening their overdrafts, a move that, the banks have been obliged to insist upon. While the fixed deposits in the December quarter have steadily risen in the last five years, the rise iu the free deposits came to an end in 1920, the decrease in 1921 being over five and a half millions. During the same period the aggregate of advances and disoo-unts grew from thirty-one millions to over fortyseven and a Half millions, and the excess of advances over deposits in the last December quarter amounted to no less than £6,623,107. The position thus created necessarily takes some time to readjust, unless markets considerably improve in the near future, as we think most likely. Although there is no cause for undue anxiety, the position is such as to call for special care -and attention. There are many encour--a aing signs, the lowering of the Bank of England rate and the improved outlook for trade in Britain being among them. that huaine"* in. the Dammioa aged®,.

stimulating is only -too evident, and there can be no question that the men who adopt enterprising methods on sound lines for disposing of commodities will be those who come out on top. Our opinion is that we have passed the worst period, and that from now onward New Zealand’s position will steadily improve.