MILLIONS MORE

New Zealand Times, Volume XLVI, Issue 10640, 13 July 1920, Page 5

MILLIONS MORE

THE BANKING RETURNS EXCESS OF DEPOSITS OVER ADVANCES. TOTAL OF NEARLY 20 AIILLIONS. The latest -bank returns, those for tho quarter ended J une 30th last, reveal a continuance of tho plentiful supply of funds that has obtained for some time past. The -excess of deposits over advances stands at the record figure ot ,8111,808,513, which is over a million more than in .the previous quarter, and nine millions more than a year ago. Both deposits and advances show increase, and the totals of liabilities continue to exhibit steady expansion. These compare with a year a ago and with iye-war figures as follow: Assets. Liabilities. £ £ June, 1020 52,460,358 71,310,711 .June, 1919 49,18-1,582 55,103.013 Juno, 1914 31,994,243 30.738.097 These figures amply demonstrate the growth of our banking business -* since the outbreak of war. The principal items in the latest returns compare with tho preceding quarter as follow: — June, 1920. March, 1920.

Tho only decreases in, tho quarter are in Government deposits, holdings ot Government securities, and metal holdings, and they are only very slight decreases. There is an increase of £3,933,000 in deposits and .£2,748,000 in advances. The former- is probably from the realisation of out produce, and the latter most likely arises from' increase in importation. We will now turn to a comparison °f th© main features with the figures of the corresponding quarters of earlier years, as this furnishes the most satisfactory -review of the movements. The greater share of the increase has naturally occurred in the deposits, owing to the -great influx of funds arising from the high prices of our produce,- and these compare as follow i June

There is a big increase of £11,592,163 in the latest year, and the total is now over double the pre-war level. The increase continues to bo most marked in the free class. Thirty-eight millions of credit balances on current accounts is a very high total, and appeai-s to indicate either a lack of channels for investment or a lack of confidence in industry. Wo shall, however, probably see a reduction before long, «s importation U increasing and will probably increase further; also the cessation of tho prompt payments for Imperial purchases will malcb a considerable difference to tuo financing of our export trade. aJio abovo are private deposits only; the Government deposits amount to £8,379,164, as compared with .£7,617,818 a year ago. The banks hold Government securities to tho extent of £6,358.097, as compared with £5,288.606 a year ago. This is not, a class of investment that commends itself to tho banks, but they have had to do thoir share in he l ping tho Avar Loans. Turning now to the advances we find the following movements in recent years:

Tho increase here is not quit© bo marked as iu deposits, but is still a heavy growth. The increased cost of all goods is a decided factor iu this growth, and we expect to see further increase hero from the same causes that will tend to decrease deposits, as stated above. The increase iu interest rates will check advances for speculative purposes, but there is no doubt that there will be heavier calls ou the banks’ funds before the year is out. The relationship of deposits to advances is always interesting, as this is the deciding factor in tho supply of money available, and is therefore by far tho most .important feature of tho returns. The*}' compare as follow in recent years— Excess of

The excess of deposits, or surplus of funds available for investment is heavier than over before. The reduction in the supply of funds in 1918 was duo to the shipping shortage causing an accumulation of produce awaiting realisation, and it was at this time that the Imperial Government came to our ajd with advances against meat still in store. The movements in these two items are of considerable interest. ( Increased prices are the principal factor in the growth in both columns. Increased cost of importations means m T creased capital required for business, but shortage of stocks has retarded this movement, and kept tho advances increase at a steady rate. On the other hand, high prices and prompt payment for. produce have boosted up the deposits. ; The only other items of general interest are the note circulation and tho metal holdings which back up the note issue, and these compare as follow

Of the present note circulation a little over a million is held amongst the banks, leaving a net circulation amongst the public of .£(3,864,307. While this is certainly a large circulation it is rot necessarily inflated, and it is fully backed by gold) in the hands of the banks. While inflated circulation is blamed for high prices, it must bo remembered that high prices cause increased circulation, as it now takes 12 or 14 notes to pay for a suit that cost 6 notes before. Also if the note circulation were withdrawn, either the coin would have to go out from the banks or else tho cheque book would bo used to a greater extent. Tho general position is quite satisfactory as wo view it. The supply of funds is abundant' at present, and ‘bis gives .the banks plenty to work on for future financial requirements. As we remarked above, owing to tho cessation if_ Imperial purchasing and tho insufficient supply of shipping to move present stocks of produce, as well ns cope with the coming season's production, there will be heavy calls for finance in the near future, but tho banks are in a good position to meet those.

• X X Deposits, free .... 38,354,182 34.814,896 Deposits, fixed ... 16,243,911 - 15,850, Deposits, Govt. ... 8,379,164 8,743,046 Note circulation... 7,926,474 7,765,500 Coin and Bullion 7.740,848 7.807.212 1,333,393 1,280.189 33,457,188 8u,/6i,851i Govt. Securities... 6,358,007 6,577,700

quarter. Free. Fixed. Total. £ £ 1920 ...... 38,354,182 16,243,911 51,598,093 1919 33,252,584 14,753,316 43.005,930 1918 23,110.629 13,929,430 36,040.079 1917 23,380,995 13,819,185 37.200,180 1914 14,698,720 10,807,025 35,505,745

June Qr. Advances. £ * Discounts £ . Total. £ ,1920 . 33,157,188 1,332,393 31,789.581 1019 . 30,887,729 1,522,977 32.110,706 1918 ' . 31.563,316 1,241.494 32,807.810 1917 . 36,809,616 1,170,687 28.280,303 1911 . 22,139,666 1,790,189 23,938.855

Jtmoqtr. Deposits. Advances. Deposits, X £ X 1920 ... 54,538,093 31,780,581 19,808,513 1919 ... 43,005.930 32,410,706 10,595,231 1918 ... 36,040.079 32,80( ,810 3,232,269 1917 37,200,180 28,280,303 8,919,877 1914 ... 25,505,745 23,938,855 1,566,890

Note Coin and Juiie quarter. circulation. bullion ■£ .0 1920 7,740,848 1919 ... 6,154.490 8,084,148 1918 8,089,638 1917 8.060,208 1914 .. 1,699,809 5,500,450