MORE MONEY IN CIRCULATION.

Auckland Star, Volume LXVI, Issue 229, 27 September 1935, Page 6

MORE MONEY IN CIRCULATION.

A rising tendency in the circulation of banknotes and bank crcdit in New Zealand has I 'been noticeable in reccnt weeks. The movement is reflected in the returns of the Reserve Bank and in the latest statement issued by the trading banks. At the end of August notes in active use were greater in amount than at any time since the Easter holiday period, and the rise appears to be continuing. Bank advances have been expanding similarly. The total of £46,340,000 at the end of August was the highest at any time for more than two years, and was £5,000,000 above the level of twelve months ago. Over the same period there has a revcrs Q movement in bank deposits,

which readied a high peak a year ago. As the summer season approaches it is likely that the figures will show a further substantial reduction. These movements in the bank returns are a welcome sign of better business and freer spending. In normal times, when trade is active, deposits and advances are around a common level; saving and .spending are in balance, and only seasonal influences and variations in production affect the ebb and flow of money. Such movements make up the annual cycle which is a common feature of New Zealand's trade, but in the past few years these seasonal ups and downs have been submerged under the tide of depression. Only now are they beginning to manifest themselves again. The margin of deposits over advances is to-day much narrower than in the early spring of last year, and a further reduction is to be expected in the months ahead. An opposite movement, depending in extent upon the prices received for produce and the volume of our exports, is to be looked for in the autumn. Mr. Forbes dwelt upon the encouraging features of tlio outlook in his address in the House last night, and emphasised the importance of the country's income from exports when he said that no money went into .circulation more rapidly than that received by the farmer from the sale of his produce.