The Southland times PUBLISHED EVERY MORNING. Luceo Non Uro. SATURDAY, JULY 15. 1911. THE BANKING RETURNS.

Southland Times, Issue 16786, 15 July 1911, Page 5

The Southland times PUBLISHED EVERY MORNING. Luceo Non Uro . SATURDAY, JULY 15. 1911. THE BANKING RETURNS.

In yesterday’s issue the Banking •eturns for the June quarter were Analysed and discussed in an article by our financial correspondent at Wellington. Some of the results are distinctly interesting as indicating that the trend of trade at the present time Is rather against than in favour of tie colony, and if the movement of the Bank figures is studied and appreciated by the traders of the Dominion it will probably result in a jurtaihnent of foreign buying. The outstanding feature of the returns is Jie Increase £2,500.000 in the ag-

gregate of the advances made by the Banks trading in the colonies to their customers. This increase is not in itself a thing to be deplored. It reflects two very satisfactory features of trade. First of all it indicates that traders have been doing good business, and that they have confidence in the future. Having sold goods freely they have imported heavy stock and otherwise enlarged their operations. They have not hesitated to increase their overdrafts, relying upon the future to provide a fair profit on the money borrowed from the Banking institutions. Secondly, it is obvious that the Banks also have confidence in the present position of the country and in the future outlook, otherwise they would have not made advances so freely. The Bank of New Zealand J alone has increased its advances by ! ! nearly £1,000,000 since June last year, and in a less degree the other Banks share in the aggregate increase of £2,500,000 in the advances. It is plain from these figures that the Banks have encouraged advances, and have readily accommodated clients who had sound business proposals to submit. Probably, the Banks have been looking for business during the past year, and they would not have done so had they not been satisfied that trade was on a thoroughly sound basis. But while the employment in trade of £2,500,000 that was lying idle in the Banks twelve months ago is a satisfactory proof of business recovery, the large increase in the advances has to be considered in relation to the movement in deposits, and the returns show that while the increase in advances was £2,500,000, the increase in deposits was only £781,680. The deposits have not increased in proportion to the advances, and the reason is that while imports have enormously increased in value exports have declined. The value of imports for the. June quarter is not yet available, but revenue returns published during the week revealed an increase of £BO,OOO in the receipts from Uustojns duties for the quarter, and when, the details of the imports are published we may expect to find a heavy; increase in the aggregate value, in the exports for the nine months ending June, on the other harid, there was a decrease of £1,391,42,4. as compared with the corresponding quarter of last year. This shrinkage in exports coupled with the increase in imports will probably represent a difference of from one and three-quarters to two million pounds, as compared with the corresponding period of last year. These figures mean that more money has been going out of the Dominion and less coming in, and the Bank figures reflect the movement. A concise comparison ’between the Banking position as at the end of June and that which existed twelve months previously may be made as follows:—-

June, 1911. June, 1910. Deposits .. £27,791,901 £25,994,675 Advances .. 20.615.55S 17,935,568 £ 7,176,043 £ 8,059,107 Govt Deposits 3,549,026 2,533,480 £ 3,627,017 £ 5,525,627 Government deposits have to be deducted because they represent mainly unexpended loan moneys, and they have no real hearing upon the trade position. It is evident from the table that the amount of loanable credit which the Banks now command is nearly £2,000,000 less than the surplus deposits in their possession twelve months ago, and they will, therefore, be compelled to deal less liberally with applications for advances. The position disclosed recalls the caution given by Mr H. Beauchamp at the annual meeting of the Bank of New Zealand against a tendency to over importation following upon a plentiful supply of money. The decline in exports and the large shrinkage in the excess of Bank deposits over Bank advances emphasise Mr Beauchamp's warning. What is required is a check on foreign buying until the heavy importations of the last twelve months have been realised and the proceeds banked to the credit of traders and merchants. That process will adjust by natural means the scale of imports to the reduced scale of exports, and will restore the tyide margin of deposits over advances. There is, of course, no occasion for alarm. The Bank returns themselves are the best evidence on that point, but undoubtedly there is occasion for prudence and restraint.