PROGRESS OF DEFLATION.

Hawera & Normanby Star, Volume XLII, Issue XLII, 12 October 1922, Page 8

PROGRESS OF DEFLATION.

A STEADY MOVEMENT.

The quarterly average note;, circulation of' the banks ; . when set/ out in sequence, gives a very clear idea of the progress made towards deflation. Banknotes are just now the only currency of the country, apart from the token ■coins in silver and copper, and the notes are legal tender. The circulation of gold is suspended here as it is in Australia, and in the United Kingdom, and the note circulation now more than ever is an index to the economic position. The average note circulation for each of the . past eleven' quarters .show as under:— ' "; '. -. ;. ." ; ■-■.■ -' : Note ■# / circulation.' v ' Quarter. £ i March, 1920.;.!;.....* 7,765,559 June, 1920, 7,926,474 I.'.'. September,' 1920 ... 7,617,289 I; December, 1920 8,252,339" i March, 1921 ■......... 7,830,206 I June, 1921 .............. ;7,853,072 , September, 1921 ... 7,135,614 , December, 1922 7,458,385 March, 1922 7,510,451 June, 1922 7,315,753 < ■:■:..; September, 1922 ... 6,486,766 Each quarter has its own special features,' but generally speaking the June and September Quarters'are the quiet periods of the year, while the December quarter is generally one ofactivity, for the dairy factories are at work, the wool has been shorn and reaches the seaboard for shipment, and -the meat companies begin operations, and as ai great amount of labour is employed the circulation naturally expands. In the March quarter the conditions are much . the same. In the June quarter there is a,slackening, and in July, August, and September ..wo reach the dull months. Prices of commodities, have fallen since 1920, and it is not as necessary now. as it was then for\ the people to hold as much money to meet their daily requirements. li the note circulation for the September quarter of each five years is taken it will be -seen;at a glance that there is a decided movement towards normality. The figures are as under :-rNot© . ; Sept. circulation, quarter; £ j 1918 6,235,344 ? 1919, > 7,357,048 1920 ..' 7,617,298 1921 .); 7,136,614 , ,1922 -6,486,766 Compare, the September quarter, 1922, with the September quarter of 1920, the" "boom" year, and it will be seen that the circulation has decreased by £1,130,532, which must be regarded as extremely satisfactory. The circulation cannot fall back to the pre-war, level unless specie payments are resumed, and that is not likely to be the case for ; some time to come. If the banks were •called upon to immediately redeem the entire note circulation m coin they could do it and still have £1,130,532' in the treasure chests. The banks in ! New Zealand are in a very sound and strong position. j