The Daily News. WEDNESDAY, OCTOBER 11, 1922. BANKING FIGURES.

Taranaki Daily News, 11 October 1922, Page 4

The Daily News. WEDNESDAY, OCTOBER 11, 1922. BANKING FIGURES.

The .returns of the banks doing business in New Zealand accurately represent the economical and financial position of the country from time to time. These figures are of special value at the present time, because of the period of depression through which the Dominion has passed. It will be seen that the returns for .the September quarter indicate that a welcome recovery has set in, partly due to the restricted lending by the banks, and in other part by the increased spending power of the people consequent on the fall in the price of many commodities, and resulting- in the reduction of bank advances and a shrinkage in the discounting of bills. The September ' quarter figures show that, as compared with the corresponding quarter of last year, Government deposits increased by nearly 11 millions sterling, while free deposits decreased by about 2i millions, and that fixed deposits increased by about £791,000. The only item m this category that calls for comment is that of free -deposits, and in the substantial shrinkage is reflected the effect of the reduction in the bank advances, the explanation being that the money which otherwise would have appeared in the current accounts of the banks customers has been used for reducing or paying off advances. As, however, the advances show a decrease over those of last year to the extent of nearly 4| millions, it is obvious that borrowers from the banks have not only been doing thein, best to reduce their liabilities, but in some cases must have liquidated their assets by sales, and it is probable this method has been followed by some in respect of their landed property, or second and subsequent mortgagees have found it necessary to pay off the advances made by the banks. It may fairly be assumed that the shinkage in the advances by the banks has not been brought about without some sacrifices being entailed. This was an inevitable aftermath of the land boom, and the wonder i« that the crisis was not more

severe, partly due. to the policy of the banks being such as to permit of a gradual easing of the ■position. The increase in the fixed deposits does not easily lend itself to explanation, though only two banks, the New Zealand and Union, show increases aggregating li millions, the other four banks showing decreases. It is remarkable, considering the low rate of interest on fixed deposits allowed by the banks, that nearly 17J millions should be thus held awaiting investment, the total for the past quarter being well above the average of the previous ten quarters. It would, certainly appear as if there was a lack of confidence in the security offered by other investments, industrial or broad acres, yet there is some satisfaction in knowing that, after passing through an unparalleled financial and economic crisis, there is such a large sum of surplus capital available in the Dominion. With regard to the decrease in the volume of discounts (£719 186) there are two points of. view from which the shrinkage can be regarded. In the first place it is evident that fewer bills are being discounted, but whether that factor arises from the high rates that are still charged by the banks (although the Bank of England rate has been reduced to three per cent.), or to an improved financial position on the part of traders and merchants rendering it unnecessary to resort to discounting, is matter for conjecture, possibly both causes having a share in the resultant effect. Another point of . view is that traders have been disposed to turn over their stocks more rapidly by lowering prices and offering inducements to purchasers to spend money, with the result that the cost of living has been slightly reduced, while the expenditure of money on relief works for the unemployed has been a contributing factor in making the position more satisfactory.. When it is remembered that the worst part of the year, so far as unemployment is concerned, has been passed, it will be seen that, on the whole, unemployment has not materially affected 'the financial strength ot the country, so that the banking returns for the last quarter may i be taken to demonstrate that the I Dominion is holding its own, and I that, with rigid economy and wise expenditure, it should not be long before increased production will restore that prosperity which, met with a temporary check. It is to be hoped the lessons to be derived from that check will be seriously taken to heart.