THE BANKING RETURNS.

New Zealand Herald, Volume LXIV, Issue 19608, 9 April 1927, Page 10

THE BANKING RETURNS.

There is no evidence in the banking returns for the March quarter of any substantial relief from the abnormal conditions which persisted throughout the whole of last year. That the usual comparison between public deposits and bank advances should show an excess of the latter at this season is exceptional; when the difference is £5,272,000 it is a serious matter. That amount represents a heavy adverse movement during the past year, and as the telegraphic summary observes, the unfavourable figure is the highest since the March quarter of 1922. Conditions are so greatly different that the comparison cannot be fully pursued. The present position is chiefly attributable to the unsatisfactory results of the Dominion's overseas trading last year, illustrated by the contraction of nearly £10,000,000 in the value of exports, against which there was only a relatively small reduction in imports. Public spending power was I diminished and the banks were called upon for loans against accumulating stocks of merchandise. The peculiar feature now is that the banking returns do not reflect the improvement in overseas ti'ade which is shown by official returns for recent months. The value of exports during the eight months from July to February was £26,023,000, only £200,000 less than in the corresponding period of the previous year, while imports were recorded at £32,376,000, a contraction of £4,000,000. That might be regarded as a substantial improvement which should be reflected in the banking returns. Unfortunately, a large part of the dairy produce exports has not been sold, and the advauces against them which would normally be discharged by this time are still carried by the banks. Excessive stocks of merchandise remaining from the period of heavy importations are also a factor in the maintenance of advances above the £50,000,000 mark. Australian "observers have suggested that the growth of the instalment-purchase system has contributed to the flood of importations into the Commonwealth. A similar influence is operating in New Zealand, and though the banks do not directly associate themselves with this method of trading, their assistance is engaged through intermediary agencies The returns are obviously evidence of monetary stringency, but reports of commercial activity suggest that it should gradually be relieved as stocks of merchandise that have been neglected during a dull period are liquidated and the proceeds are received from exports that have takeu longer than usual to realise.