MONEY BAROMETER

Dominion, Volume 19, Issue 256, 13 July 1926, Page 10

MONEY BAROMETER

WHAT BANK FIGURES SHOW UNSATISFACTORY POSITION DEBTS INCREASE, CREDITS DECREASE The banking returns for the past quarter disclose heavy contractions in the deposits and heavier increases in the advanccs, undoubtedly due to tlic adverse trade position. The spending power of the community is about £3,000,000 less than it was a year ago. Ihe conditions at the moment call for economy, and for co-operation on the part of all. The banking averages for the June quarter of last year were very satisfactory, but the averages for the June quarter this year show almost a complete reversal of economic conditions. The effective items of the banking returns compared with the figures for the corresponding quarter of 1925 show the following movements: — Government deposits increased Free deposits decreased 2,90j.7i:> Fixed deposits decreased .... 291.0<Advances increased 4,5114,784 Discounts increased _l4.lSb Circulation decrease 46.-. M Coin and bullion increased .. 12G.-..8 There is a substantial contraction in the free deposits, and a very big increase in the advances, and the banking figures very accurately reflect the adverse state of our foreign trade. The trade returns for the vear ended June 30 are not yet available, but lor the twelve months ended Mav 31 the imports totalled £52,236,015 and the exports £15,764,578, showing an excess of imports over exports of £6,471,437. The bank averages show that advances increased bv £4,56-1,784, and current account balances had contracted by £2,902,713, together equal to £7,467,494, which is more than the excess of imports, but probablv if the June trade figures were available they would more nearlv correspond to the bank figures. Taking the different classes of deposits the movements ar* shown in the table appended: —

Notwithstanding a substantial expansion in Government deposits, the aggregate shows a decrease of nearly two millions. Dealing with the free deposits or current account balances, all the banks show shrinkages, as will be seen by the table appended:—

In the June quarter of last year, the free deposits exhibited an increase of £2,160,449 over the June quarter of 1924, but last year was one cf high prices for produce, particularly wool. The fixed deposits exhibit a small shrinkage, due entirely to the smaller amounts held by the Union Bank and the Bank of New South Wales. The figures of the several banks compare as

♦lncrease. tDccrease. The free and the fixed deposits for the June quarter of each of five years are given in the table appended;—

The fixed deposits exhibit a shrinkage for the first time for about five years. The total deposits show a substantial decline, but the total is still well above that of 1924 and preceding years. The advances furnish the most significant table of all the banking figures. Compared with twelve months ago there is an increase in the advances ot over 4J millions, and all the banks have been drawn upon very freely for accommodation. as will be seen by the table appended: — June, 1925. June, 1926. Increase.

The whole of the ■!{• millions borrowed from the banks, together with the amount represented by the shrinkage in the free deposits, appear to have been sent out of the Dominion, which is ve,rv probable in view, of the excess of the imports. The discounts show an increase of £214,188, and ihe figures of the several banks show as under:—

Taking the advances and discounts for the" June quarter of each ot five vears, the position is as under:—

Taking the free and fixed deposits which represent the amount borrowed bv me banks from the public, and tlie advances and discounts representing the amounts lent by the banks to the public, the excess of the one over tlic other is shown in the table appended :—

The above table shows the great change that has come over the. economic position in twelve months, for whereas last vear the banks were indebted to the public to the aipount of £7 527 866 this vear the public is indebted to the banks to the extent of £415,.T.>2. For the past three quarters the. 'position has been unsatisfactory, but if the ininorts contract substantially and the balance of trade is restored the position would right itself speedily. The spending power of the community

has also contracted. The note circulation which represents the money in the pockets of the people and available lor immediate expenditure and the current account balances against which cheques can be drawn represent spending power, and these compare as under:— June. 1925. .Tunc. 1926. £ C Circulation .... fi.593.518 fi.547.5->;> Free deposits .... 30.497,209 27,594,490 37,391,057 34.442.051 There is a shrinkage of £2,949,006 as compared with twelve months ago, which must have an adverse effect on domestic trade. The unsatisfactory economic conditions, which may be only temporary, have been emphasised bv the Prime Minister, and others, and efforts must be concentrated on restoring the balance of trade, which means increasing exports and reducing imports. Such efforts mav cause inconvenience, _ and some hardship, amongst certain sections, but in the long run the Dominion will benefit and prosperity will again smile on the land.

Juno. 1025. Juno. 1920 Deposits. £ •£ _ Government 3.087.080 4.320.2<8 1.238.598* Free .... 30.497.209 27.594.490 2.902.713t Fixed .... 20.900,420 20,074,853 291,5737 54.551.315 52.595.027 1,955.0887 ♦Increase. fDecrease.

June, 1925. Tune, 1026. Decrease. Bank. £ c £ New Zealand 14,081.439 12.849,720 1.231,713 Union .... 3,715,770 3,450.103 205,1’07 N.S. Wales 3.300,605 2,876,806 423.859 Australasia 3,031.940 2,587,783 444,157 National 5,384.240 • 4,854,379 975,699 529,867 Commercial 983,149 7,450 30,497,209 27,594,490 2,902,713

under:— •Tune, 1925. June, 1926. Bank. £ £ New Zealand 10.404.187 10.597,571 193,384* [Into: . • • • 2,585,588 2,285,807 299,7214 N.S. Wales 3.229.631 2,708.341 521,2904 Australasia 1,705.518 1,781,095 75.577* National 2.783,649 2,953,047 169,398* Commercial 257,853 348,932 91,079* 20,960,420 _20.674,853 291,573f

Fixed Free Total J une deposits. deposits. deposits. quarter. 1822 . £ 16,342,413 25,046,473 £ 41,388,886 1823 . 17,406,748 28,270,204 45,682,952 1824 . 10,292,552 28,336,760 47,629,312 1325 . 20,366,426 30,497,203 51,463,635 1328 . 20,674,853 27,534,436 48,263,349

Bank. £ £ £ New Zealand 18,722,237 10.993,592 1,271.355 Union .... 4,934,(108 5,(105,238 700,030 N.S. Wales.. 3,099,893 (1.110,804 1.010.911 Australasia 4,472,505 8.115.002 4,740,010 273.505 National ... 9,173,037 1,058.035 Commercial 1,040,804 1,290,552 249,748 42,421,049 40,985,833 4,504,784

.Tune, 1925. June, 1920. £ £ A . X'r.w Zealfl nd 924.100 1,103,997 179.777* ... 40,827 45.5SS 1,239f N.S. Wales .. 157.494 154.305 3.1891' Australasia 120,701 110,002 4.7591 National . .. 223,053 250,501 32,848* Commercial .. 41.825 52,575 10,750* 1,514,720 1.728,908 214,188* •Increase. 1 Decrease.

June Advances. Discounts. Totals. quarter. 1922 44,438,917 1,717,017 40,155.934 1923 ... 40,227,091 1,484,180 41,711,274 1924 ... 19°5 ... 42,408,993 42,421,049 1,470,593 43.SS5.5S0 1,514,720 43.035,759 1920 ... 40,985,833 1,728,908 48,714,741

June Deposits, quarter. E 11)22 .. 41,388,836 1023 .. 45,082.952 Advances. Excess of 4, 46.155,934 4.767,048 adv. 3,971,073 dcp. 41,711,274 Itt' t .’47,629,312 43,885,58(1 3.743,720 dep. .. 51,403,035 43,935,709 7,527,860 dep. 1920 .. 48,209,349 48,714,741 415,392 adv.