The Gisborne Times PUBLISHED DAILY. WEDNESDAY, JULY 21, 1920. IS THERE A LACK OF CONFIDENCE?

Gisborne Times, Volume LIII, Issue 5538, 21 July 1920, Page 4

The Gisborne Times PUBLISHED DAILY. WEDNESDAY, JULY 21, 1920. IS THERE A LACK OF CONFIDENCE?

There is a belief, in some quarters that the increasing amount of money in the hands of the banks is evidence of a lack of confidence on the part of investors. ft. is certainly true that the commercial banks and the savings banks of this Dominion never before had at their command such an enormous aggregate of surplus moneys. Let us quote from the June banking returns in support of this contention. At the end of June, 1914, the deposits, free and fixed, in "the hands of the Commercial banks totalled 25£ millions. Of that sum over 14L millions repre-

sontecl free deposits, and over 10J millions fixed deposits. -But as at 1 June 30 of this year the total of such moneys so held was over 54£-j millions. The amount of free deposits was over millions and of | iixed deposits 161 millions. As • compared with the corresponding date of last year this year’s aggregate shows a growth of not less than j 11£ million ! The most astonishing j feature of the latest return is, it i will be agreed, the fact that clients , of the various commercial banks j have in the aggregate credit bal-, ances on their current accounts ot well over 38 millions. It would, indeed, be interesting if a return could be published showing what proportion of this immense sum of idle moneys is held on behalf of the different classes of clients, An even batter guide as to the extent of moneys available is, no doubt, the relationship of deposits to advances. In the latest banking returns it is shown that the excess of deposits over advances, as at June 30 last amounted to close on 20 millions. On the corresponding date in 1914 the excess in this regard was only 1} millions! Unquestionably the high prices for produce and prompt payment in recent years have boosted > up the deposits. As might have . been anticipated there has, during; the past three months, been an in- ; crease in the demands on tile banks J for advances but, happily, in nothing; like the .same ratio as the growth in deposits. In large measure > the enhanced cost of imported goods is, no doubt, responsible for that state of affairs. With the increase that is being made in interest rates advances for speculative purposes are, however, bound to be checked for the future. That many people, at any rate, do not Jack confidence is illustrated by the success which has attended efforts bv a number of big companies recently to raise large amounts of additional capital. This journal is of opinion that the “hold up” of surplus capital in this Dominion is due for the most part to the dearth of new works on account of the present abnormal cost of making improvements and of extending industries and businesses of all kinds. As soon as labor becomes more plentiful and the prices of all building materials recede to a more reasonable level there will, we believe, be a boom from on end of this country to the other. What does, however, seem strange is the fact that. although the banks are being allowed the free use of over 38 millions by djients with credit balances, there is so much talk about the need on the part of j«ih.ose institutions, to advance theifPrates of interest! It is. of course, held that, owing to the commandeer system coming to the end, producers will soon require _ to go to the banks for accommodation. The number of -producers that will come under this heading should really not he' very large. In the circumstances the banking returns for the current quarter and for the final quarter of the present year should prove the most interesting ever published in this Dominion. What appears to be wrong is not that there is any lack of confidence on the part of investors jn this country hut that at the present time they have only limited scope for the investment of their surplus moneys.