THE FINANCIAL OUTLOOK

Otago Daily Times, Issue 14465, 6 March 1909, Page 5

THE FINANCIAL OUTLOOK

AX INTERESTING RKYiI'IW. (Fsou Our Owe Corbespoiidknt.) WELLINGTON, March 5.

The Mercantile Gazette, published last night, says that certain trading and manufacturing comuanies are accepting deposits in competition with the banks, and it is a question whether the State should not step in to prevent it. Dealing with the main question, the journal says the monetary stringency continues, and during the current month is likely to be emphasised, because three banking institutions close tlieir accounts on the 31st insl.., and it is usual for banks to pull in overdrafts and do other things which in Stock Exchange slang is known as "window dressing." The stringency is disclosed in the Post Office Savings Bank accounts. During the second half of 1908 the withdrawals exceeded the deposits by £62,949, while for the corresponding period of 1907 the deposits exceeded the withdrawals by £515,792. For the year 1908 the deposits were in excess of the withdrawals by £256,254, while 1907 exhibited a gain of £1,291,242. For the

current quarter tlie withdrawals will again show a substantial excess, and it is to be feared that this will he the feature of the year unless the Government steps in and increases the rate of interest to an extent to induce depositors to allow their funds to remain with the department. Bui the. experience of the l'ost Office Savings Bunk is not singular. The banking returns showed Unit the private banks had lost deposits, and there is reason for belie.\ing that the building societies and similar institutions are also losing deposits. Some of the joint stock companies have made a practice of accepting deposits, and recently these concerns have offered very attractive rates for such funds. The building societies were thus forced to take'some'act ion. In Wellington tiiese concerns were giving 4j per cent, for deposits fixed for 12 months, and it was agreed to raise the rale to 5 per cent., but bank pressure was brought to bear on the societies, and they were induced not to advertise tho higher rate. Some of the companies are accepting sub rosa deposits at 5 per cent., and pressure has had to be exercised on the joint stock concerns 'to prevent them from forcing up the rales. If at the end of the quarter the position shows no change for the better, it is just probable that the banks may raise their deposit, rates, which would necessarily mean a consequential advance in the'overdraft rates. It is just as well to prepare public for this possibility. There is one feature that may exercise, a favourable influence. If at the next London wool sales, which commence on Tuesday next, the 9th insl., the staple, registers an advance there may be a change in the views of bankers, and a higher rate may not be imposed."