GOLD AND NOTES

Evening Post, Volume CVIII, Issue 146, 17 December 1924, Page 3

GOLD AND NOTES

BANK OF NEW SOUTH WALES.

Mr. Thomas Buckland, president, speaking at the ordinary general meeting ot the Bank of New South Wales in Sydney, said that note circulation in JNew Zealand had decreased £150 000, and was lower than it had been for years past. Deposits were £731,000 lower than at this time last year, but the disappearance of the cross entry of £921,----rtX) for war gratuities more than accounted for the difference. Bills pay?m n& rOUp, . sllowed a deprease of £1,. IiM.OuO, which was caused by a reduction of some £730,000 in London com""tments. The remaining balance of £400,000 was well distributed among the other items of the group, and was quit e normal. Reserve fund had increased £250,000. Coin, notes, and casJl balances at bankers. showed a reduction of £l;648,0C0; London items and other banks an increase of £462,000, and securities a decrease of £970,000—in all, £2,156,000. Of this £1,261,000 appeared in increased advances, and the balance was reflected m the decrease in bills payable just mentioned. J"Advances showed an increase of £1,261,000, as compared with this period last year. Abnormal demands, in addition to the usual seasonal, requirements, had been made for financing both country and city clients; but the swing of the pendulum should be now the other way, and "we feel justified in anticipating that an appreciable amount from the large sums coming in just now from exports vji'J be reflected in a reduction of our ad'ances and increase in deposits,"the president remarked. Mr. Buckland remarks that in New Zealand the iaw controlling currency entitles the bank to issue up to the total of its coin and Government securities. "The right of this bank is roughly £2,000,000, whereas our actual issue at present is only £415,000, and beara practically the same ratio to its deposits as it did in 1917,' although between then and now it varied from 9 to 16 peff cent. Taking all the Banks in New Zealand the following ratios are of interest:—Notes to deposits in 1917, 12 per cent., now 13 per cent; notes to coin, 64 per cent., now 82 per cent.; notes to total assets, 11.7 per cent., now 10.6 'per cent.

"The total bank note circulation in New Zealand is £6,400,000, with a.limit of over £13.000,000, and the fact that the banks have not abused the trust placed in them is surely a reply to thosa here who loudly assert that if the banks had the right to issue, grave inflation would, or might, result, and that a Government manaced issue of notes affords ?,-,,- et. ter Protectwn to the community, while on this question of currency, I should like to refer to the question of allowing our gold to continue to leave the country as at present. Can we af- ™ tO 1u° Wi Say' to £3,000,UW worth of gold produced to be exported annually, in the face of the present world outlook?

t u t° ", lye notes for the g°ld held b« the banks would only change the sold from the banks to the notes board and only a small part of the notes given therefor could be circulated, but for the note board to buy the gold .. produced would add annually to. the note currency, and thus to the convenience and advancement of commerce and the country generally. It would add annually to the board's store of gold and increase its ratio of gold to liabilities in no other way can the stock of gold m Australia be economically increased, and the issue of notes against gold gives a. legitimate increase to the circulation " Touching, oh the magnitude of tha banks' London and foreign business, Mr. Auckland said its transactions for tha twelve months ended 30th September last, to and from London, were approrimatel/ 555.C00.000 sterling, but the margin of profit thereon was unusually small owiner to the hieh premiums for transferring funds back from London