POSITION SOUND

Poverty Bay Herald, Volume LV, Issue 17236, 16 April 1930, Page 10

POSITION SOUND

LATEST BANK RETURNS BUT CAUTION ADVISED TRADERS’ HEAVY ADVANCES, The bank returns for the March quarter, which have just been made available, for review, present a very different picture from that of the March quarter, of .the two previous years. A year ago,- thanks to two excellent export . seasons, the banks held a heavy surplus' of 'deposits over advances of £8,985,751. However, the present returns show the effect of increased imports- and reduced exports, and thus the large surplus of deposits lias dwindled down to £326,461. The drop in export values, particularly wool, is the main "factor in causing this diminution in the surplus of funds in the hands of thefhanks. There is also the factor

that there are heavy stocks of produce on hand awaiting shipment, and the value of these stocks at March 31 as regards wool, dairy produce and meat may safely be put down at six millions. The present financial position lias already been discussed, and the recent raising of exchange rates as against importation shows that the banks have realised the situation and recognise that imports must bo Restricted in accordance with tho reduced purchasing power of the community.

However, the present position is not nearly so bad as in 1927, when the March quarter showed an excess of advances of over five millions. The March quarter usually shows a marked replenishment of the hanks’ funds through realisations coming in from the shipment of the season’s produce, hut on this occasion there is only a- comparatively slight improvement of £777,559, as ‘compared, with the December quarter, whereas a year ago the improvement was,over.five millions in the corresponding period.

BALANCE OE TRADE. The position is a little peculiar, in that the balance of trade for the year ending with February showed a reduction of nine and a half millions in the excess of exports, while the bank figures show a reduction of ten and three-quarter millions in funds available.

Tho position at present is not a very happy oni' for the time of the year, but it is distinctly better than in 1926 and 1927, and doubtless with restriction in imports and general carefulness we shall pull through. Wo have heavy stocks of produce on hand which, when shipped, will help toward restoring the balance, and the position is not nearly as bad as it has been in some previous years.

The present exchange position, however, indicates a need for care and prudent, trading.

THE OUTLOOK

Locally, the financial position at present is peculiar and somewhat complicated. Imports will have to he

restricted, as our national income from exports is materially reduced, but we have over £6,000,000 worth of produce awaiting shipment. There is evidently some leakage of funds, as a reduction in the balance of trade for the year ending February 28 of £9,500,000 was reflected in a decrease in tho banks’ funds of £10,750,C00. There is a general decline in export values, and possibly some of our exports may have been over-valued. In this connection, it is interesting to note that a. drop of Id in the -export values of wool, meat, and dairy produce would mean over £4,000,000 loss to the Dominion, and all these products have fallen in value recently. Every Id per pound on wool means very nearly a million. We are faced with tho position that we have £8,500,0C0 less available than we had a year ago. However, we have been under similar, if not worse, positions before, and we shall pull through again, but it is necessary that imports should be cut down to bare necessities and everything done to help the exchange situation.