Bay of Plenty Times. EVENING DAILY WEDNESDAY, NOV. 6th., 1935. THE BANKING POSITION.

Bay of Plenty Times, Volume LXIV, Issue 11867, 6 November 1935, Page 2

Bay of Plenty Times. EVENING DAILY WEDNESDAY, NOV. 6th., 1935. THE BANKING POSITION.

. The returns of the six trading banks for the mouth of September were issued last week, and compared with August and September of last year there are’ several movements which are worth notin g. Dealing first" with the deposits, the free deposits show a small shrinkage as compared with August, and a decrease of over a million pounds as compared with September of last year. The figures compare a sunder:—

Free Deposits. £ Sept. 1934 .... 25,771,320 Nov! 1934 .... 23,835,044 March, 1935 27,673,865 July, 1935 .... 25,196,141 Aug. 1935 .... 24,778,818 Sept. 1935 .... 24,635,039 These movements are somewhat erratic, and it would be interesting to know to what extent the imports have affected these figures. Looking over past returns, the free deposits were at their lowest point in November last year, when they stood at £23,835,044. Compared with March of this year these deposits were less in September by about £3,000,000. Turning to the fixed deposits, these show a small increase as compared with August, but a substantial decrease as compared with September of last year; The ures compare as under*.—

. .Fixed Deposits. £ Sept. 1934 .... 39,586,720 Nov. 1934 .... 38,065,565 March, 1935 35,454,703 July, 1935 .... 85,990,554 . Aug. 1935 .... 36,382,220 Sept. 1935 36,750,637 The deposits are still out of proportion with the free deposits, although they show a substantial decline from the peak which was reached in July last year, when the amount stood at £40,592,374. The free and the fixed deposits combined have shown a tendency to contract, but mainly in respect of fixed deposits, which is not a _ matter for regret for it means either that money is being transferred from New Zealand, or that the holders oLfijed deposits are finding suitable investments in other directions. The total of the free and fised deposits, reached its highest point in* August of last y6a r, when’the amomit stood

at £66,447,581, and at the close of September last at £61,385,676, a decrease of just over £5,000,000 This means, of course,, that there is that much less credit in the banks at the dispbsal of the public.

The advances have been expanding for some months past, and in the appended table the figures of several monthly returns are given:— Advances. £ Sept. 1934 .... 41,603,073 Nov. 1934 .... 44,417,637 March, 1935 44,573,365 July, 1935 :... 45,899,615 Aug. 1935 ... 46,339,960 Sept. 1935 .... 47,711,493 Compared with September last year the advances, have increased by over £6,000,000, which must also be taken as a good sign,' for the increase indicates that traders and others are now in a position to make profitable use of bank credit. The margin between the deposits, that is, the amount owing by the banks to the public, and the advances, the amount owing by the public to the banks, is now very small, being only £13,674,183 at the end of September, as compared with £18,555,203 at the end of March last. The, note circulation shows an increase of about £230,000 compared with August, and an in cT’ease of £400,000 compared with July. The circulation at £6,841-, 823 was at its highest in. Decern-' her last and for September this year stood at £6,492,841. The note circulation is “managed” and that will prevent atiy tendency towards inflation, if , the policy of the Labour Party of guaranteed prints for primary products, with a reduction of exchange on London, and the Reserve Bank passes under political control, it would be difficult, if not quite impossible, to avoid currency inflation.

.■ London funds show a remarkable development. In the first weekly statement issued on August ji by the Reserve Bank, the total of the London exchange was shewn at £24,486,049. At the end of September last ...the total had* fallen to £19,987,942, while at the end of last mouth there was a further drop to £16,831,482. Comparing the sterling exchange held at the end of September last year and this year we get the following:— - Sterling Exchange. '■ £ Sept. 1934 ..'.. 25,107,289 Sept. 1935 16,831,482

8,275,807 The only purchaser of exchange from the Reserve Bank would be the Government, and .it is very probable that the whole amount will be taken over by the end of two years. The London funds of the trading banks have increased from £7,751,171 at the end of September last year to £16,206,520 at the end of September this year.