WAR FINANCE.

Lyttelton Times, Volume CXVII, Issue 17699, 28 January 1918, Page 4

WAR FINANCE.

The publication in the “Gazette” of the Post Office Savings Bank accounts tor the last quarter enables us to give the totals for the year. The figures are not surprising in view of the extraordinary prosperity that exists, but they should impress anybody who realises that we are in the midst of a war involving enormouK expenditure by the Government. The strain on the public finance ought to be reflected in the condition of private banking ae'ounts. If the people had been con-

tribnting properly to the cost of the war the record of aggregate savings would he affected, to say the least. But what is the position? The deposits in the Post Office Savings Bank last year amounted to more than one and a half times the deposits in the last pre-war year, the movement having been from £11,286,702 in 1913 to £17,106,529 in 1917. In passing, we may repeat the warning given in these columns on previous occasions Against, looking upon these deposit* as representing the savings mainly of working people. It is, indeed, impossible lor any reasonable person to imagine that, with the cost of living so high the workers could have increased their deposits by nearly £6,000,000. 'The growth is due to the overflow’ from the trading banks, in the main; it means the transfer from non-interest-bearing balances into an interest-bearing channel. An analysis of accounts wholly supports this contention. However, we need not go into that now. Our purpose is to show once again how money is being hoarded when it ought, to be poured out for the war, and to strengthen the case we have endeavoured to make out in these columns in favour of a policy that would reform and stabilise the country’s war finance. Adding together the Savings Bank deposits and those of the other banks as disclosed in the December quarter averages we. find that the totals have expanded during the war to this remarkable tune: — 19J3. 1817 6 l Trading banka, IJaoempar quarter 32,839,221 32,274.517 Post Office Savings Bank, year's total . 11,286,702 17.” f .’3 Total* . . . £.34,135,923 £49,.3 -.010 Here we have a growth of deposits exceeding fifteen and a. quarter millions. or about 10 per cent. Of oonrse, the ndvnnees and withdrawals have also been heavier than usual. Until last year, when goods from abroad were difficult and in many instances impossible to secure, imports were on a shockingly excessive scale, while expenditure generally was unchecked in the first years of the war either by taxation oi- local borrowing. Those conditions swelled advances and withdrawals. The raising of war loans within the Dominion lias been another large factor; although the advances in 'this respect consist to a considerable extent of credit, not money. But a balance between deposits on the one hand and advances and withdrawals on the other shows that the excess of deposits in all the banks last year was £3,893,000, as compared with a deficiency in 1913 of £757.000. In other words, judged by their bank books, the people were £4,650,000 better off last month than they were four years before. We are, however, understating the position, because over £930,000 of interest has to be added to the Post Office Savings Bank credits, while the balances of depositors in private savings banks have grown by some £240,000. Thus the total improvement is about £5,820,000. After three and a half years of a war calling upon every individual for financial sacrifice, the men and women of this country are guilty of this enormous expansion of their bank credits. The system or policy that allows this must require overhauling. The reasons for the position disclosed by the banking returns are—(l) leaning upon the Mother Country for war money during the first two years of the war. (2) failure to pay a reasonable share of the expenditure by taxation, and (3) the method of floating war loans through the assistance of the banks and the expansion of the note currency. We believe the most practical steps that could now be taken to improve the situation is to startcontinuous borrowing. The machinery is simple. It lias been constructed by the British Treasury and only needs to be copied here, where the people would, we feel assured, respond quickly and generously.