THE FINANCIAL RECOVERY.

New Zealand Herald, Volume LIX, Issue 18215, 7 October 1922, Page 8

THE FINANCIAL RECOVERY.

Anticipations of a substantial improvement in the banking position are shown, by the returns published to-day, to have been fully justified. There is an excess of advances over deposits of £1,032,584 in comparison with the excess of £4,767,048 for the June quarter. Thus more ground has been recovered in the last quarter than in either of the two preceding periods, and the position gained is the most favourable since the end of 1920. The full extent of the movement since then is shown by the following comparison of private deposits and advances:— Excess of Deposits. Advances. Advances. 1921. £ £ £ March . . 47.155,726 52,446.330 6,290,610 June .. 45,511,09f> 64,385,485 8,874.390 September . . 43.445.&5:3 48,039,611 4.593.948 December . . 40,935.01!) 47,558.725 6,623,100 1922. March .. 40.360.590 46.491.31E1 6,130,925 Juno . . 41.388.880 46.155,934 4,767.048 September.. 41.961.66'.! 42,994,44(1 1,032,584 The soundness of the recovery is evident from, the fact that the movement Of the nominal deficit is attributable almost wholly to the reduction of debts due to the banks. On the year there has been a gain of £5,045,000, and in comparison with the June quarter, a gain of £3,161,000. The movement in deposits has been much smaller, amounting to an increase of £573,000 for the quarter, while comparison with the figures of a year ago shows a decline of £1,484,000. It is in fact highly improbable that the aggregate of deposits will expand greatly—the tendency seems to be in the other direction. The latest figure shows an increase of about 80 per cent, abovo the total deposits in 1913, and if allowance is made for the difference in the value of money, the remaining margin appears somewhat larger than the increase of population and the growth of business warrant. It is noticeable that the amount of fixed deposits has increased considerably v during the year, and more during the quarter, but that movement, a symptom of

lack of either opportunity or confidence for financial adventure, will be checked whenever the revival of enterprise offers attractive investments. Setting aside the returns for the period from 1914 to 1920, as I reflecting conditions that were wholly abnormal, the present position, with an excess of advances of only 2.V per cent., compares favourably with that of 1913, when deposits exceeded advances by 7 per cent. In normal circumstances the spring quarter would probably show a favourable balance, but the relation is so little removed from normal that it presents an almost decisive argument for a reduction of the overdraft rate from the extraordinary figure to which it was raised in February, 1921. Much of the criticism directed against the policy of the associated banks has been illogical, and agitation for relief was commenced prematurely, but in face of the condition of their business in New Zealand and of the accumulation of funds abroad, the banks should now reconsider the matter and even if the action has a savour of philanthropy, determine to ease the burden of interest charges carried by their customers, and at the same time give fresh encouragement to the country in its efforts to recover its former prosperity.