BANKING RETURNS

New Zealand Times, Volume XLVI, Issue 10718, 12 October 1920, Page 3

BANKING RETURNS

INSTRUCTIVE FIGURES REDUCTION IN SUPPLY OF MONEY. BUT POSITION SOUND AND SATISFACTORY. Three months ago in reviewing these figures we drew attention to the fact that the supply of funds held by the banks had attained a higher level than ever before. The excess of deposits over advances was then .£19,803,512. At the time we expressed the opinion that a reduction iru this surplus was coming before long, and the latest figures show this reduction to have started already. The surplus is now .£14,113,880, which is a fairly heavy one, and just a million less than a year ago. The principal items of interest in the latest returns, compare as . follows with the figures of three months ago:— Sept., June, 1920. 1920.

Free deposits have decreased bv .£l,867,182, and advances and discounts together have increased .£4,228,227. _ These movements are probably due mainly to the heavy importation of the last few months. With scarcity of goods, and fear of importing too heavily on high prices, stocks had got down to a low level. However, for the first eight months of this year imports amounted to .£35,510,318, or five millions more than the full year 1919, and about double the pre-war standard. Note circulation has declined, but this is mostly in the amount held timongst the banks themselves. The actual circulation with the public is onlv .£77,700 loss than in the previous quarter. We will now compare the latest figures with the corresponding periods of previous years. Deposits show the following movements in recent years:— Sept. Free. Fixed. Total, qtr. JS <£ •£

.£7,758,808 in tlie last year, and is over double the Tire-war total. The major part, of the growth is in the free class, which suggests funds lying idle waiting investment, or. to pav for goods coming forward in iime. Of. course the increase mainly arises from the high prices i«oliged for our produce, coupled with lestricted importation. Importation is now increasing rapidly, and if prices for our produce' recede, we shall undoubtedly sea a shrinkage in the total of deposits. Already advances are affeoted' by the increased importation, as w.ill be seen by 'ho following comparison i Sept. Advances. Discounts. Total.

Tlie increase in the last year is particularly henvv. and the increase in dis"OiiTits, is a,-nnt'cpahle feature. Of oour?e. infixed nnrelv by th? morie-v «tandard.,all f.rade boo increased considerably, and ™>Ti=pauen , 'lv reonires more caoital, and this in a H"\ above prowth. T>.""o'=ito and ndvrmc<"i compare as fol'ok for the periods under review:— Sept. Excess of Qr. Deposits. Advances. Deposits. £ £ £

The surplus, though still a very large one, shows a reduction of .£1,109,227 in the year. Following are the shares of the different banks in these deposits and advances:—

Deposits. Advances.

Each hank shares in the growth in both deposits and advances. Government deposits amount to as compared with .£5,995,305 last year, and the banks hold ,£6,206,623 of Government securities as against. .£3,252,331 a year ago. Metal holdings and note, circulation, the only other items of interest, compare «« follows: Sept. Note Coin and Qr. Circulation. Bullion.

Metal holdings have dropped back &',(Z~>,lsb in the year, but circulation has increased .£2G0,251. However, the circulation, apart from what is held amongst the banks, has an increase of JJ6"3,oft2. Increased wages and the l>i;;her cost ofrfoods are probably the chief factors in this. The situation appears sound and satisfactory at. present from these figures. However, they give a clear indication that a movement in the direction of a reduction in the available tupply of rnnney.,hais started, and wo expect to fee this movement 'inthe now currenit quarter it. a much greater degree. Importation is growing, and wo have to finance our coming season's exports ourselves, end these two factors are going to cause a decided drain on the supply of funds. However, the banks hold a very good amount of money now, so there is no need to anticipate any acute shortage.

£ je .. 36,487,000 38,354,182 .. 16,644,694 16,243,911 Deposits, Govt. .. 7,527,835 8,379,164 Note circulation ., ,. 7,617,298 7,926,474, .. 1,825,867 1,S32,393 .. 37,191,941 33,457,188 Coin and bullion.. .. 7,710,616 7,740,848 Govt, securities .. 6,202,623 6,358,007

1920 86,487,000 16,644,694 53,131.694 1919 30,331,318 15,041,568 45,372,886 1918 21,646,245 T4,123,961 35,770,206 1917 , ., 2i;567,821 14,139,816 35,707,037 1914 14,172.777 10,838.886 25,001,663 The total of depoi sits has increased

qtr. £ £ £ 1020 .... 37.191.941 1.825,867 39.017.808 1919 .... 28.7W.870 l.ses.fxw P0.149.773 1918 .... :.... 80.403.fi96 1,242,938 st.«e,<m l«17 .... 27.117.092 1.297,460 28.415.452 19U 22.717.577 1.744,999 24.462.576

1920 .... 53,131,694 3%017,&0S 14,113.686 1919 .... 45,372,8S6 30,149,773 lo,223,113 1918 .... 35,770,206 31,646,034 4,123,572 1917 .... ■ 35,707,637 28,415,452 7,292.185 1914 .... , 25,001,663 24,462,576 539,087

Bank of New Zealand 25,630,48-} 17,531,869 4,943,962 Bnnk of N.S.W 6,823,749 4.4-48,402 Bank of Australasia 6,105,110 4.966,884 National Bank ....... 8,256,660 6,446,258 Commercial Bank ... 1,072,001 680.423

£ £ 1920 7.710.616 8,04«,071 8,140,798 1917 8.31S.50I 5.823,576