The Dominion. FRIDAY, OCTOBER 16, 1908. THE BANK RETURNS.

Dominion, Volume 2, Issue 329, 16 October 1908, Page 6

The Dominion. FRIDAY, OCTOBER 16, 1908. THE BANK RETURNS.

, The monetary, conditions existing in Now Zealand have been freely discussod throughout the Dominion, and an analysis of the-banking returns for the September quarter will no doubt bo read with unusual interest. The broad features of the returns are an abnormal increase in the volume of the advances, a record expansion in the discounts, a very largo decrease in the freo deposits, which is exceptional, and decreases in tho note circulation and metal reserves. These are distinctly adverse features, and emphasise tho fact that the Dominion is moving in the direction of a depression. Dealing with the figures under the different headings, we have first ,to touch upon the assets and liabilities. Comparing the figures with those of last year, we get the following:— Sep. 1308 Sep. 1907 £ d 6 Assets 29,110,113 26,670,871 Liabilities ... 23,078,419 25,385,970 6,031,69! 1,284,901 The above figures show a very big change, for while last year the assets exceeded the liabilities by only £1,284,901, this year the excess amounts to the enormous sum of £6,031,694, and this is brought about by the large increases in l the advances and discounts which form part of the assets, and the equally substantial decreases'in the Government and freo deposits. These figures are a reply to the aspersions of those who maintain that tho banks are not lending as freely as they should.

Turning now to the advances, we find that, compared with a year ago, there is an increase of £2,449,959, in which all the banks have shared, as the following will show: — Sop. 1908 Sep. 1907 Increase Bank £ • £ ,£ New Zealand ... 7,396,035 5,999,876 1,396,159 Union 3,158,-132 2,961,735 196,697 N.S. Wales 2,907,710 2,583,153 321,557 Australasia. ... 2,913,171 2,580,428 3*>2,73(> National 2,512,610 2,372,840 169,800 18,947,991 16,498,032 2,449,959 The banks appear to have been very liberal with their advances, still wo can understand some borrowers meeting with disappointment, for the banks cannot lend beyond their resources. If we turn to' the discounts, hero again we see a substantial expansion, again testifying to the liberality of the banks. The discounts, which last year totalled £2,000,152, have this year grown to £2,269,968, an increase of £209,816. The Union Bank and the National Bank show small decreases, and the position of each institution is disclosed in the table appended: — Sop. 1908 Sop. 1907 Bank £ ' £ £ ' Now Zealand ... 1,081,853 870,921 213,932 inc. Union 212,800 213,233 133 dec. N.S. Wales' ... 303,823 277,612 26,211 inc. Australasia ... 353,489 321,461 32,0'#! inc. National 315,003 816,025 1,922 doc. " 269,816 jjio.

Tho advances and discounts are the highest on record, and for the first time tho indebtedness of the community to tho banks under these heads exceeds twenty millions sterling. To show the position, we givo the advances and discounts as afc September 30 for a period of eight years, and the figures are instructive:— Advances Discounts Totnl Sep. 30 4; .fi ,£ . 1001 10,15G,612 1,863,537 12,050, MS 1002 10,778,512 1,747,093 12,525,005 1903 11,596,135 1,895,032 13,491,167 1004 12,4(33,93,'! 2,030,628 14,494,559 1905 13,258,897 2,107,623 15,360,520 1908 1 14,600,765 1,972,126 16,572,891 < 1907 10,498,032 2,000,152 18,498,194 1908 18,947,991 2,269,068 21,217,959 The figures speak for themselves, and show how great has been tho pressure on the banks this year as compared with previous years. Now wo come to the freo deposits, and, as already stated, there is an unusual decrease. The figures of each bank compare as under:— „ , Sep.'l9oß Sep. 1907 Decrease Bank £ £ £ New Zealand ... 4,765,012 5,387,151 622,139 Union ... ... 1,423,757 1,804,091 380,334 •N.S. Wales ... 1,372,143 1,575,112 202,969 Australasia .... 1,134,133 1,382,432 248,299 National ... 1,?17,513 1,808,414 C 0,901 10,412,558 11,957,200 1,54-4,642 The freo deposits are, of course, the current account balances, and tho shrinkage is significant. Traders and others are using up their savings to moot engagements. The one satisfactory feature is tho fact that there is a small increase in the amount of the fixed .deposits, in which all the banks except the Union Bank have participated. Tho comparison of the figures is given below:— Sept. 1908 Sep. 1907 Bank ,£ J3 New Zealand ... 4,731,568 4,660,024 71,544 inc. Union ... 1,362,777 1,386,282 . 23,505 dec. N.S. Wales ... 1,685,563 1,645,961 39,602 inc. Australasia ... 637,583 565,018 72,565 iuc. National ... 1,479,958 1,440,518 39,140 inc. ' 9,897,419* 9,697,803 199,646 inc. But this small increase is more than offset by tho decrease in the amount of the Government deposits, which for tho past four years.show as under:— Government Deposits. Sep. 30 £ 1905 ... 1,987,858 1908 2,072,290 1907 1,952,291 1908 ... 1,065,097 There is a shrinkage of £887,194, so that tho fixed, free and Government deposits in ..the aggregate arc less than they wero a year ago by £2,232,100, while thi advances and discounts have increased by £2,719,775, making a difference of £4,951,965 to the b ( inks. Taking the free and fixed deposits for a series of years, we got tho following:— Free. Fixed • Deposits. Deposits. Total. Sept. 30. £ £ £ 1901 ... 7,067,003 8,215,334 15,282,337 1902 . ... 7,912,954 8,661,878 16,574,832 1903 , ... 8,834,827 8,868,556 17,702,883 1904 ... 8,996,885 8,950,358 17,947,243 1905 ... 9,180,049 9,493,943 18,673,992 1906 ... 9,950,802 20,611,361 1907 ... 11,957,200 9,697,803 21,655,003 1908 ... 10,412,558 9,897,449 20,310,007 Up to this year tho aggregate of the fixed and freo deposits has exceeded the advances and discounts, that is to say, the amount lent by tho public, to the banks was greater than the amount borrowed by the public from the banks. The following table in instructive J l -. Deposits. Advances. Sept. SO. ii £ 1904 17,947,243 14,494,559 1905 ... ..: 18,673,992 15,366,520 1906 ... 1.. 20,611,361 16,572,891 1907 ... ... 21,655,003- ■ 18,498,184 1908 . ... ... 20,310,007 21,217,959 Last year the deposits exceeded tho advances by £3,156,819, this year tho advances exceed tho deposits by £907,952. Tho note circulation and the metal reserve are both less than they were a year ago. The amounts of these two items for a series of years are given below: — Circulation. Metal. Sept. 30. ,£ 1901 1,325,553 3,030,015 1902 1,347,567 3,234,050' 1903 1,420,290 3,722,695 1904 1,429,938 3,921,930 1905 1,427,547 4,022,318 1906 1,552,682 • 4,727,953 1907 1,594,661 5,003,839 1908 1,545,815 . 4,881,637 No one can read these .banking figures and feel enthusiastic over the situation. Obviously we are in a worse position than we were a year ago, and there is little prospect of wool, meat, hemp, hides, skins and tallow showing any material improvement in values just yet. With a lessened income we cannot expect to go on spending in tho same lavish manner as in the past, without incurring grave troubles. The situation calls for economy in public and private life, and the sooner this is realised the better.