THE BANKING RETURNS

Nelson Evening Mail, Volume LVI, 14 July 1925, Page 5

THE BANKING RETURNS

EVIDENCE OF BOUNTIFUL SEASON

Evidence that, the fruits of a bountiful season and excellent prices have created a condition of abundant- prosperity' in New Zealnad is afforded by T the bank statements for the June quarter, comments the New Zealand Herald. Public deposits have risen to £51,463.000, which is within three millions of the second quarter in 1920, and though the exees of deposits over advances—£6.l67.ooo in March and now £7.528, - 000—is far below abnormal figures . of the two years following the close of .the war, the occurrence of such a margin under normal conditions is a sign of unprecedented monetary ease. The achievement- of this condition is a striking demonstration of the economic vitality of the country, for while favourable seasons and good prices have helped and encouraged recovery, a substantial expansion of production, industrial harmony and a prudent, exercise of economy predominating over a . tendency to careless extravagance have'been the chief factors in reconstructing a healthy degree of prosperity 7. The contrast between present conditions and those prevailing during the depth of depression is significantly indicated by a comparison of banking returns. In that period, public deposits have in.creased by £5,952,000 while advances have been reduced by £10,450,000. Even ■ more illuminating is- the fact that the fluctuations during the last eighteen months have been chiefly in the volume of deposits, for the movement in advances has been very small except in the December quarter, when there was th usual . demand for advances against produce. Tii-us, progress during this period lias not relied to-any 7 great extent upon the stimulation of bainking credit. The returns represent only the average position 7 in each quarter. so that they 7 may conceal an extensive but- rapid turnover of banking accommodation. The large excess of deposits ‘does, however* suggest either a conservative control of credit or lack of public confidence toward new enterprise. If neither of these explanations is adequate,- the alternative would seem to be that the high rates for money are curtailing the opportunities for investment. Whatever.; the causes of this accumulation of wealth,. its .existence and the prospect of-its-mainten-ance are manifestly favourable for a prudent development of the policy of domestic borrowing by both the Government and local authorities. '