The Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, JANUARY 15, 1913. TIGHT MONEY.

Southland Times, Issue 17244, 15 January 1913, Page 4

The Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, JANUARY 15, 1913. TIGHT MONEY.

The banking returns for the December quarter as analysed in our issue of yesterday disclosed the fact that the banks have practically exhausted their capacity to make advances to clients. In the aggregate they have loaned out more than the whole amount of their deposits, and once again the balance as between deposits and advances is on the wrong side of the ledger. Not so many years ago the banks of the dominion had surplus deposits to the amount of £4,000,000, for which they were seeking investment. Their business then was to induce clients in whom they had confidence to accept advances and make profitable use of the money. Now the boot is on the other, foot. The surplus of deposits has disappeared, and the banks, instead of seeking opportunities for making sound advances, are perforce refusing applications, and where possible some of them are calling in money. The position is due not so much to a large expansion of advances, for these, including discounts, are only £155,000 larger than they were last year, but deposits have fallen away in comparison with those of last year by £1,307,000. More than threequarters of a million of the decrease is accounted for by the shrinkage in Government deposits, due no doubt to the slowness of loan money in coming forward from London. The decrease in private deposits amounts to £524,000, and this can only he explained by reference to the continued Increase in importations. In a sense the position is not so serious as it was at the end of 1908, when advances exceeded deposits by £2,000,000, but at that time there was an explanation which cannot be offered in this case. As the result of the American panic financial conditions throughout the world were greatly disturbed, and a fall in the price of wool caused the Dominion’s exports to drop suddenly in value and checked the inflow of money. This year, though there is undoubtedly a stringency in the money market, our export trade is buoyant, showing an increase of over £2,000,000, as compared with last year. In ordinal y course this increase of exports should have had the effect of largely increasing deposits at the hank, and the shrinkage of deposits can only be explained by an expansion in the volume of imports -which has absorbed the whole increased value of the exports and more. Of course the full effect of the present export season has not _yet been felt and doubtless the returns

for the March quarter will disclose a substantial improvement. We have the prediction made by Mr Harold Beauchamp, Chairman of Directors of the Bank of New Zealand, that the stringency will soon pass, but the figures for the December quarter emphasise Mr Beauchamp's warning that In order to relieve the position it is necessary that importers should exercise prudence and strict moderation.