THE FINANCIAL SITUATION AND OUTLOOK.

Press, Volume LXIV, Issue 13249, 17 October 1908, Page 8

THE FINANCIAL SITUATION AND OUTLOOK.

The bamking returns for the September quarter, which wore analysed with some care by a Wellington correspondent in "The Press" of yesterday, to a largo extent tell their own tale. They show that there has been an unusual demand by clients of the banks for accommodation, and that the hanks have liberally respond eel. They also show that for the time being tho accumulating power of tho Dominion has been checked, seeing that although there is a slight increase in fixed deposits, in response to tho higlicr rates of interest offering, thero has been a reduction in the sums lying at current account to customers' credit, amounting to £1,544,642. The advances and discounts—in other words, tho money borrowed by the public, together exceeded tho deposits or tho money lent by tho public. Tho advances and discounts together amounted to no less than £21.217,959, constituting a recorelfor the Dominion. In September last year the deposits exceeded the advances by £3,156,819; tliis year tho advances exceed tho deposits by £907,932. Wo havo in previous articles indicated what were, in our opinion, the causes of tho present- stringency, and j there is no need to go over the same) ground again. Fortunately, the remedy j to a very large extent lies in our own I hands, and there is every indication; that, with ordinary prudence, ease toj the money market will follow in ro-i sponse to the very favourable outlook which lies before the great staple industry of the colony, namely, farming. Thero has been, we are afraid, too much land speculation, especially in tho North Island; that will necessarily; receive a wholesome check if "only for ! the reason tliat the banks wiH no j longer advance money for such j operations. There has been a \ tendency to extravagance on tho part of tho people, leading to excessive importations. Probably we i shall most of us exercise a little more self-restraint in tho immediate future, impelled thereto by tho rapidly rising cost of living. Thero has been too ■ much floating capital locked up in Go- " vernment and municipal loans, and al--1 though it is not easy to release this capital by selling the ' debentures in other nuulkeLs, 1 yet both Government and local * bodies have had it home in upon them s that in future they must raise any 1 money they require elsewhere. In s the meantime' it is certainly better for * those colonists who have invested in % these debentures that their money is >• safe, bringing in a reasonable rate of t interest, instead of having been dissi--1 pated in wild-cat speculations, such as '• is too often tho case in periods of "t "boom" like that through which we

havo recently passed. But although these aro all factors in the situation, the greatest relief will come from a good season and good crops for themen who aro the backbone of tho country's prosperity, the fanners. We 1 shall not venture to prophesy as te the i price of wool, although the tone of tho present sales is distinctly encouraging. 1 What is clear is that tho dairy farmers havo every reason to be hopeful, that the lambing has been one of tho best on record, that thero is an unusually largo acreage in crop, and that up to the present the weather conditions have been everything that could bo desired. With anything like a continuance of these conditions, and with fair prices for grain and other produce, tho farmers should do well this year, and instead of wanting accommodation not a few of them should havo money to inj vest. We should feel perfectly happy j about the future if only the Govern- | ment had shown a little more foresight and prudence, curtailing borrowing and current expenditure, instead of selecting tho present period of stringency te inflate both beyond all previous records. When a Government is unable or unwilling to look further ahead than the general election, close at hand, tho interests of tho country are lost sight of in the struggle to secure for t'ho party a return to power.