MONEY AND AFFAIRS.

Manawatu Standard, Volume LVII, Issue 101, 31 March 1937, Page 4

MONEY AND AFFAIRS.

LONDON BANKS. (By~hLJ.K.) The position of the “big fire” London hanks reflects the financial state of the- world, for London is the hub of the monetary world. These great London institutions closed their balancing period at the end of last year. The chairmen of the several banks delivered their illuminating addresses to shareholders in January, and the speeches strike a reasonably optimistic note. The industrial and financial activity during 1936 has been reflected in most of the bank balance-sheets, noteworthy amongst these being tho figures of the Midland Bank which shows that the assets of this world’s leading bank reached a new high record of £532,712.500, an increase on the year of £45,604,000. The Midland Bank puts up a second highest record with deposits at £479,767,000, an increase on 1935 of £44,436,000; while advances at £189,516,500, were £12,400,000 higher. Deposits of the Westminster Bank at £364,309.000, were higher by £43,330,000, and the advances at £125,249,000 were £10,700,000 higher than a year previous. The National Provincial Bank balancesheet shows deposits at £320,900,000, an increase of £18,452,000._ and advances amounted to £122,077,000, an increase of £10,018,000. Barclay’s Bank, Lloyds Bank, W illiam Deacon s Bank and the District Bank all show record figures. N.Z. BANKING. The returns of the trading hanks for the month of February were issued last week, and they show the expected normal movements. The demand deposits at the end of February totalled £36,737,593, as compared with £35,020,901 at the end of January, and £31,080,367 at the end of Deoember last year. Compared with December there is an increase of about £5,700,000 m the free deposits, which cannot be regarded as other than normal under the new conditions. Dairy farmers are now paid for their shipments through the dairy factories, and the latter do not have to wait for realisations in London. But the great increase in the free deposits has probably arisen from the increased quantity of wool sold locally, and‘the higher prices realised for the staple. In'February of last year the free deposits totalled £30,469,321. The gain in February this year is over £6,000,000 and not so very great when the economic conditions are taken into consideration. The time or fixed deposits continue to contract, which has been a feature in respect of these deposits since December, 1935. The time deposits at the end of February amounted to £32,599,858. as compared with £32,949.080 at the end of January and £33,123,748 at the end of December. In February last year the time deposits totalled £37,160,745, so that the shrinkage in the twelve months totals about £4,600,000. The aggregate of the free and fixed deposits amounts to £69,337,451, as compared with £67,630,060; there is thus nil increase this year of about £1,700,000, which probably is the measure of inflation of the currency. The advances and discounts at the end of February totalled £45,759,288, against £47,416,649 at the end of January, and £48,281,952 at the end of December. The drop in the advances of about £2.500,000 since the close of last year simply means that with the realisations on wool and other produce overdrafts have been repaid or reduced. The margin between the deposits, that is, the amount owing by the banks to the public, and the advances, that is, the amount due by the public to the banks, is £23,578,163 as compared with £20,553,332 at the and of January and £15.922,133 at the end of December last year. The excess of deposits over advances at the end of February last year was £22,869,527. The note circulation at the end of February was £8,460,755, against £B,355,153 ’at the end of January, and £10,443,223 at the end of December last year. There is an increase of about £IOO,OOO compared with January, but a decrease of about £2,000,000 compared with December. When the March returns are issued it is most likely that the note circulation will show an expansion because of the Easter holidays. The note circulation at the end of February last year was £6.917,414, but the cost of living then was much lower than it is now, and therefore less money was carried in the pockets. The London funds held by the trading banks at the end of February totalled £8,308,008, as compared with £7,361.885 at the end of January, and £7,907,916 at the end of December. At the close of February last year the London funds of the banks totalled £12,725,268. Since then, however, the banks have lost the handling of dairv produce accounts and. moreover, the departure of so many people to witness the Coronation festivities in London has no doubt made inroads into the London funds. The banking returns are quite satisfactory. CAPITAL REQUIREMENTS. Several companies have, and are appealing for additional capital, and are not finding any difficulty in filing their requirements. A big Australian shipping and trading company are offering 500,000 shares of £1 each at par to the shareholders on a ratio basis, and as the market value of the exastin<r shares is at a. high premium the shareholders are, in effect, receiving a substantial bonus. This competition of trading companies in the capital market must affect the money market and make it difficult for the State and local bodies to obtain money at cheap rates. While existing companies of any repute have no difficulty in obtaining the funds thev require. it is significant that capital fights shy of new concerns. A certain number of private companies are registered each week, but public companies cannot be floated. It is difficult to know wha.t raw material can be exploited here. Our resources m this respect seem to l>e very restricted. Last vear another record was established in the United Kingdom with respect to the registration of new companies. The total was 13.742, an increase of 639 over 1935, which also set up a new record. Statistics show that the increase in number and total capital were both attributable to private companies, of which there were J0,0z4, against 12,673 in 1935, an increase of 651, with capital aggregating £IOB,861.595 against £81,763,37/, an increase of £27,098.218. Public company figures show a slight diminution the ■number being 418. compared with 430 in 1935, and total capital £49.309,64J, compared with £54,870,733. The real proportion of. public to private companies is greater than appears on the surface inasmuch as many concerns originally incorporated as private companies have been subsequently converted into public concerns. In view of the 1936 Finance Act provision restricting avoidance of taxation it is interesting to note that 65 per cent., of the 145 registrations were effected during the first 16 weeks before the Budget and 80 during the remaining 36 weeks.