H.—35.

consideration of this aspect of our economic affairs is necessary towards a true understanding of the position. The main conclusions to be drawn from this analysis may be summarized as follow : — (1) Our favourable balance of visible exports has fallen from £11,302,215 in 1928 to £1,914,778 in 1930. (2) The collapse in prices during 1930, superimposed upon a considerable decrease in 1929, has been responsible for this unsatisfactory state of affairs. (3) Costs of production of primary produce have not fallen appreciably. (4) The present level of the export-prices index is considerably below that of the farmexpenditure index. (5) While the long term trend of prices on the overseas markets would appear to be downward, the immediate future outlook points to a recovery from the present exceptionally low level. (6) Conditions of supply may affect the comparatively few commodities which make up our export trade more than monetary conditions, so that prices for these commodities mav move to a less or greater extent than the general price level. (7) Wholesale prices in New Zealand have not fallen to the same extent as export prices, and retail prices have " lagged " still further behind. Effects of Depression on the Banking Situation. The stagnation in industry and trade consequent on the price-movements which have been examined in the preceding pages is reflected in the official banking statistics. The following table shows the total amount of deposits, the total of advances, and the ratio of advances to deposits each month of 1930 and the early months of 1931 : —

The ratio of advances to deposits has increased very considerably during the later months of 1930, the October, November, and December figures reaching an actual excess of advances. It is interesting, in this connection, to take cognizance of the relation between free and fixed deposits during 1930 and 1931.

! { The abnormally low ratio of free to fixed deposits is a significant indication of the inactivity in industry, investors "apparently preferring an assured return on their money, either on account of a lack of" confidence in the business outlook or because of a lack of attractive investments offering.

30

Eatio of Mouth. Deposits. Advances. Advances to Deposits. —_ 1930. £ £ PerCent. January .. •• 56,101,904 53,508,578 95-38 February .. .. 57,151,252 53,083,920 92-88 March ... .. .. 58,803,127 54,285,598 92-32 April .. .. •• 59,201,765 54,940.841 92-80 May . ■• 59,016,402 54,291,956 91-99 June .. .. •• 58,428,332 53,177,632 91-01 July .. .. .. 57,728.232 52,289,888 90-58 iugust .. •• 52,544,150 92-92 September .. .. 54,572.657 52,650,707 96-48 October .. .. 53,413,268 53,421,800 100-02 November .. .. 53,172,354 53,324,720 100-30 December .. .. 53,136,779 53,219,865 100-20 1931. January .. .. 53,325,129 53,059,951 99-50 February .. .. 54,039,144 53,306,944 98-65 March .. .. . • 54,935,342 53,393,890 97-19

Ratio of Month. Free Deposits. Fixed Deposits. "Free" to Fixed Deposits. 1930. £ £ Per Cent. January .. ■• I 23,345,888 30,313,068 77-02 February .. .. 24,024,401 30,179,432 79-61 March '. .. •• 24,244,301 : 29,859,297 81-13 April •• 24,016,259 29,967,398 80-14-May ■■ 23,273,271 30,582,953 \ 76-10 June .. .. i 22,555,389 30,917,262 72-95 July .. .. : 21,743,931 31,249,558 69-58 Wust .. .. I 20,552,141 31,646,012 64-94 September .. .. j 20,251,386 32,226,434 62-84 October .. .. 18,993,705 32,654,956 58-16 November .. .. 18,474,116 32,828,637 56-30 December .. .. 18,380,121 32,829,565 56-00 1931. January .. ...I 18,198,910 32,940,040 55-25 February .. . ."] 18,613,861 33,092,923 56-25 March .. .. •• 18,207,391 32,831,054 55-46 1