The Bay of Plenty Times THURSDAY, JANUARY 16th, 1941 THE FINANCIAL SITUATION

Bay of Plenty Times, Volume LXIX, Issue 13240, 16 January 1941, Page 4

The Bay of Plenty Times THURSDAY, JANUARY 16th, 1941 THE FINANCIAL SITUATION

It is important in these war times to keep a close watch on the financial position of the country. In view of the increased expenditure. the high taxation and the high cost of living, the monetary situation is all important. The best guide to the situation is revealed by the trading banks, in their returns for the four weeks ended November 25. The most important item of the returns is, of course, the deposits which, in the main, represent the working capital and the reserves of business. The demand or free deposits Avhieh may be taken as the working capital and the spending nower of business community, on November -0, stood at * £48,831,125, which showed an increase of not quite £2,000,000 over the previous month. This increase would be due to export income as November would see the beginning of the export season. The total is not very striking, for in June last these deposits amounted to £49,112,596. The time or fixed deposits, which may be regarded as reserves were lower, the figures on November 25 being £29,734,816, against £30,352,1/1 in October, a decrease of about £617,000. The two classes of deposits on the date under review, amounted to £77,938,685 which shows an increase of about £850,000 on October. The total is much lower than it was in June, when the deposits amounted to £80,000,000. It was only in January, February, and October last year that the deposits were less. The inference to be drawn from this is that we have less money available than in the middle of 1940. The advances show very little movement. The total on November 25 Avas £47,262,596, against-£47,476,039 in October. The advances Avere loAver in other months of last year. The excess of depostis OA r er advances amounts to the huge sum of £30,676,980, which must be embarrassing to the,banks, although it is not the largest excess during the year, for it Avas over £33,000,000, in both June and July. Money has accumulated in the banks largely owing to import restrictions, and Avill be needed, when imports can be brought into the country more freely. The overseas funds of the trading banks on November 25, amounted to £15,471,701, which shoAvs a small increase OA r er October. As a matter of fact there has been very little movement in these funds since May last. The more lavish State expenditure is reflected in the notes in circulation. On November 25, 1940, this, amounted to £16,405,058, as compared Avith £13,117,068 on November 27, 1939. The financial position is more or less stationary, and , the outlook for the so called u National Development Loan” is not very promising. The loan is not likely to be rushed in vieAV of the fact that income tax has to be paid next month, and the last instalment of the War Loan in March. As this Development Loan is optional it is likely to be severely left alone for the present. Investors are bound to look ahead and the future is obscure. One thing that seems fairly certain, is that Avhen the Nvar ends, there will be a great demand for money for capital expenditure, particularly in Europe, and interest rates must advance. The Post Office Savings Bank Avhieh is patronised by the small depositors, shows that during the tAvelve months ended March 31, 1940, the AvithdraAvals exceeded the deposits by £4,311,351, and in the eight months since then to the end of November last, there was some recovery for the deposits exceeded the withdrawals by £2,048,031. One Avould have thought that Avith the free spending that is characteristic of the time, the would have been able to save more, but perhaps the increasing cost of living and the. increased taxation nOAV. falling upon a great many workers, is affecting the situation.