THE BANKING RETURNS.

New Zealand Herald, Volume LXIII, Issue 19455, 11 October 1926, Page 10

THE BANKING RETURNS.

A contraction of banking resources, usually by a reduction of private deposits and a small increase in advances, is normal in the third quarter of the year, for importations are heavy at that period and the seasonal flow of exports is only beginning to expand. But it is abnormal for the banking 'returns of the September quarter to reveal an excess of advances over deposits, much less so large an excess as £2.341,000, as appears in the summary of the statements published today. Such a condition has - not appeared ■ since the September quarter of 1922, when the excess was £1,032,000—a figure which actually marked the last phase in the depression of 1921-22. When the returns for the last eighteen months are considered, the position is still more disquieting. The normal cycle is a plethora of funds in the June quarter, a contraction in the spring months, still heavier demands leading to an excess of advances in the December quarter, and a favourable movement in the March quarter, when the proceeds of produce realisations come into the account. During the whole of 1921 and 1922, the bank statements showed for every quarter an excess of advances. That will be the record of 1926, as the following summary discloses: — Deposits. Advances. 'Excess. 1925 £ £ll June'.. 51,463,635 43,935,769 *7,527,866 Sept. .. 47,753,425 44,975,360 *2,778,065 Dec. .. 46,030,362 48.554,427 +2,524,065 1926. March... 47,302,480 43,285,142 +982,662 June .. 48,269,349 48,714,741 +445,392 Sept. .. 45,982,853 48,323,946 +2,341,093 "Excess of deposits. +Excess of advances. A condition of abundant prosperity, the fruits of a bountiful season and excellent prices, was reflected in the returns for the June quarter of 1925, when deposits were within three millions of tho extraordinary record in 1920. Equilibrium had been recovered, only to be grieviously shaken by the shipping strike, lasting from August to October, and since then extravagance in importation, in spite of frequent warnings, and contraction of the value of ex ports through falling prices have caused monetary stringency and economic depression. The banking figures so closely reflect the course of the Dominion's overseas trade that either may be accepted. as a reliable barometer. From July, 1924, to September, 1925 —15 months —the trade returns showed an excess of imports of £875,000; Jor the

same period, there was a net adverse movement in the banking position of £966,000. From July, 1925, to the end of August, the latest available statistics, the excess of imports was £7,900,000 ; the adverse movement in the bank returns has been £9,869,000, the last figure including the effect of the excess of imports in September. There is, however, one encouraging feature that may easily be overlooked in considering that the position is so much worse than it was last year, and that is the indication that the adverse movement has been checked. A contraction of imports has already been noticed in the trade returns ; the drain on deposits and the demand for advances has also been less than usual during the last quarter. In 1923, the excess of deposits shown in June was reduced in the September quarter by £2,859,000; in 1924, the reduction was £2,545,000, and in 1925, no less than £4,750,000. This year the increase in the excess of advances has been £1,895,000. The contrast with last year is very striking. It suggests that a salutary check has at last been placed upon the tendency to reckless importation and that measures have been taken which will presently accommodate the Dominion's purchases to its lower spending power.