GOLD AND NOTES

New Zealand Times, Volume LI, Issue 12017, 20 December 1924, Page 13

GOLD AND NOTES

BANK OF NEW SOUTH WALES. Mr Thomas Buckland, president, speaking at the ordinary general meeting of the Bank of New : South Wales in Sydney, said that note circulation in New Zealand had decreased £160,000, and was lower than it had been for years past. Deposits were £731,000 lower than at this time last year, but the, disappearance of the cross entry af £921,700 for war gratuities more than accounted for the difference. Bills .payable group showed a decrease of £1.132.000, which was caused by a reduction of some £730,000 in London commitments. The remaining balance of £400.000 was well distributed among the other itenra of the group,, and quite normal. Reserve fund had increased £250.000. Coin, notes, and cash balances at bankers showed a reduction of £1,648.000; London items and other hanks an increase of £462.000. and securities a decrease of £97o,ooo—in all, '£2,156,000. ,Of this £1,261,000 appeared in increased advances, and the balance was reflected in the decrease in bills payable just mentioned. Advances showed an increase of £1,261,000, as compared with this period last year. Abnormal demands, in addition to the uauul seasonal requirements, had been made for financing both oountry and city clients: but the swing of the pendulum should be now the other why, and “we feel justified in anticipating that an appreciable'amount from the large sums coming in just now from exports will be reflected in a redaction of our advances and increase in deposits,” the president remarked.

Mr Buctland remarks that in New Zealand the law controlling currency entitles the bank to issue , up to the total of its coin and Government securities.

“The right of this bank is roughly £2,000,000, whereas our actual issue at .present is only £415,000. and bears practically the same ratio to its deposits as it did in 1917; although between then and noiw it varied from 9 to 16 per cent. Taking all the banks ip Zealand, the following ratios are of'interest:—Notes to deposits in 1917, 12 per cent., now 13 per cent,: notes to coin, 64 per cent., now 82 per cent.: . notes to total assets. 11.7 per cent., now 10.6 per cent. “The total bank note circulation in New ■. Zealand is £6.400,000. with a limit* of over £13.000,000, and the fact that the banks have not abused the j trust placed in them is surely a reply to those here who loudly assdrt that if| the banks had the right to issue, grave | inflation would, or might, result, and I that a Government-managed issue of notes affords the better protection to the community. “While on this question, of currency, I should, like to refer to the question of allowing our gold to continue to leave the country as at present.' Can we afford to allow, say, £2,500,000 to £3,000.000 worth of gold produced to be exported annually, in the:fade of the present wprld outlook P ■ ‘To give notes for the gold held by the banks would only change the gold from the banks to the notes hoard, and only a small part Of the noted given therefor could he circulated, hut for the note hoard to buy the gold 'produced would add annually to the note currency, and thus to the convenience and advancement of commerce arid the country generally.: 3jfc would add annually to the hoard’s store of gold, and increase its ratio of gold to' liabilities, In no other way can the stock of gold in Australia be economically increased, and the issue of notes against gold ’ gives a legitimate increase to the circulation.” " .

■ Touching on the magnitude of the banks’ ■ London and foreign business, Mr Buckland skid its transactions for the twelve months ended September 30th last,, to and from London, were approximately £55,000,000 sterling, hut the margin of profit thereon was unusually small, owing to the high premiums for transferring funds back from London.