BANKER’S SURVEY

Wairarapa Times-Age, 1 December 1941, Page 6

BANKER’S SURVEY

NEW ZEALAND IN WAR TIME FINANCIAL AND OTHER FACTORS. INFLATIONARY TENDENCIES LESS EVIDENT. In his review of New Zealand conditions at the annual meeting of the Bank of New South Wales, Sir Robert Gillespie, president of the bank, stated: “New Zealand has had some creditable achievements in the second year of the war.” A year ago, spending power was increasing faster than the volume of goods available for consumption, and prices were rising dangerously. However, inflationary tendencies are less evident now, and the rise in prices has been slowed down. The big increases in taxation introduced with the 1940/41 Budget probably helped to bring spending power more into line with goods available for consumption. As there were no large reserves of unemployed, there has been some redistribution of the employed population. There is a decline in the numbers employed in building trades, and the number of men engaged on State employment promotion schemes has declined by half. These men have been absorbed into other industries or into the armed forces. More positive measures are being taken in training labcur for essential industries.

By no means insignificant is New Zealand’s contribution to the Allied war effort. Industrial war production has not advanced as far as production in Australia, nor will the conclusion of the war see the same drastic changes in the economic structure of the country. However, minesweepers, trainer aircraft and munitions are being produced in New Zealand, while New Zealand’s contribution of manpower has been made at great sacrifice to the industrial organisation. London funds are in a fairly healthy position. At the end of June they totalled £31,000,000. However, these will not meet the expenses which New Zealand is incurring overseas, and additions to the long-term debt are inevitable.

There has been less movement in trading banks’ figures in the past year than for some time. Thus the effects of war finance in New Zealand are very different from those in Australia, where deposits rose substantially in the second year of the war. In New Zealand employment and wages were already at a high level before the war and deposits were high. Moreover, the New Zealand Government's encroachment on private enterprise had extended greatly before the outbreak of war and had thus curtailed the avenues open to trading banks’ advances. Demand deposits have increased slightly partly because of buoyant export income and rigidly controlled imports. There has been a slight fall in fixed deposits and a rise in the trading banks’ holdings of Government securities, as loan issues have been greater in the past year than for some time. Advances increased a little over the year.

“The bank, in common with, other trading banks,” said Sir Robert, in conclusion, “will continue to do its utmost to assist the war effort, and will continue to co-operate with the Government. The Minister of Finance, Mr Nash, recently remarked that he felt that the banks were rendering a service as efficiently and at as low a cost as the State could, and the bank will by no means diminish its efforts to serve the public and the war effort.”