The Timaru Herald WEDNESDAY, OCTOBER 13, 1926. ECONOMIC BAROMETER.

Timaru Herald, Volume CXXIII, 13 October 1926, Page 8

The Timaru Herald WEDNESDAY, OCTOBER 13, 1926. ECONOMIC BAROMETER.

How completely tlie destiny of New Zealand reposes in the fortune» of tlie> lium oil tlie land is revealed, in the latest bankingfigures. “The .hanking returns/' says the published summary, “for the September disclaim an increase of £3,127,374 in the advances, and a shrinkage of £1,91)3,801 in the free deposits. This position is'due mainly to the decline- in the value of _ the Dominion’s primary deposits.'’ Unquentiona lily, the banking figures are less pleasing- than they were a. year ago. There is a coil-trac-tiou of income, and the banks have been drawn upon for increased accommodation. A year ago tlie returns disclosed a satisfactory position, although even wool was uncertain. Since then, the wool cheques have com© in and the funds at the disposal of the Dominion have shown a serious shrinkage. This is shown in rlie latest banking returns. The shrinkage in the tree deposits or current, account balances is most pronounced. A year ago there was an. increase, of these deposits totalling £1,591,123 —this 1 year there is a decrease of £1,903,901. fixed deposits, show a trifling increase, but it is worthy of note that although compared with last year there is a shrinkage this yoar- of ' total deposits of £1,770,572, tlie aggregate ia higher than in any other year since the slump. In 1924 the total deposits were £45,122,025, compared with £45,982,853 this year. Advances, on the. other hand, show an increase of £3,127,374. As a general rule hank advances make bank deposits, and it will ho seen that notwithstanding an increase of over three millions in the advances the deposits have contracted by nearly a million and a half, and the inference is that so much capital lips been forced to,leave the Dominion to meet foreign commitments. The discounts show an increase of £221,212.. Tlie aggregate of the free and fixed deposits which represent bank borrowings, and the advances and discounts which repre.vcnt bank lendings, the excess of the one over the other for the September quarter c>f five years is shown in the table appended:— Excess of. Sop. deposits, quarter. £ 1902 1,032,582* 1923 " 1,112,108 1924 ;;; 1,198,044 lflo.l . ... 2,778,065 1920 .' ... 2,341,093* *Excess of advances.

Dealing with the same item's for each quarter the position is as under:—

Excess of Quarter. £ ' Mm- 1925 ... ... ... 6,166,966 dep Juno 1925 7,527,866 dep Sept. 1925 2,778,065 dep.. . Dec. 1925 2,524,065 adv Mar 1926 982,662 adv June 1926 ' 445,392 adv Sep. 1926 2,341,093 adv In September of last year the deposits exceeded the advances I> V £2,778,065, now the advances exceed the deposits by £2,341,093 and that illustrates the change that lias come over the economic situation. The economic baro-. meter is pointing to caution, since the banks are lending- move money to their . customers than thev are receiving. ITence it is interesting tp compare the spending power of the people . to-day with that of a year ago. Dor this pui-pose the free deposits _ or current account balances against which cheques can he drawn, and the notie circulation which is available for immediate circulation, are taken. In September, 1925, the free deposits totalled £26,811,762, and the note circulation £6,566,308 —a total of £33,378,070. The figures for this year show that tlie. spending power of the people, has contracted by £1,984,671 in twelve months, since the returns for September quarter show free deposits £24,907,961, circulation £6,485,438—a total of £31,393,399. Whilst it is clear that the banking- returns suggest the need for prudent expenditure, it must l-,o confessed that never before has the impregnable financial .stability of this country been so emphatically demonstrated in view of the world-shaking effects of I ho industrial depression m the Old Land, resulting from a coni strike which has tended to paralyse all industrial activity for nearly six months. New Zealand is sound at heart, but in view of world-wide economic conditions, the hanking returns suggest that the utmost caution should bo exorcised in the domestic >nd national finances of the- people.