The Wanganui Chronicle MONDAY, JULY 22, 1935. BRITAIN’S ECONOMIC RECOVERY

Wanganui Chronicle, Volume 79, Issue 169, 22 July 1935, Page 6

The Wanganui Chronicle MONDAY, JULY 22, 1935. BRITAIN’S ECONOMIC RECOVERY

pHE commercial summary which lias been cabled out Jrom London during the week-end points to two factors which are considered to be pointers to economic recovery in the United Kingdom. These two pointers arc: (1) The excessive amount of bank deposits; and (2) the oversubscription of capital issues. The monthly returns for the ten clearing' banks, that, is tu say. the banks which are members of the London Clearing House, reveals that deposits have been enlarged, to £2000,000,000. the previous high figure being £1,983,000,000 millions which was registered in December, 1932. The enlargemqht of bank deposits may mean one or two things; namely, that bank deposits have been increased by an increase of bank credit being called for and having been provided, or it may mean that debtors of London have been pilingup credit balances with a view to repaying those portions of their London loans which are not renewed on the refundingissues. The fact that there is plenty of money in London awaiting investment, and that this has been evidenced by the oversubscription of recent issues, would point to the latter explanation being the more likely. Accumulations of bank balances in London are also influenced by the unsettled conditions which prevail elsewhere. In view’ of the situations which for some time has prevailed in France and Belgium, it is small wonder that those who accumulate balances in London on trading account should prefer to leave them there. In fact, viewing the European situation generally, it is not unreasonable to suppose that a considerable portion of the increase in funds in London is “fugitive” money, that is. money which is running away from home to escape dangers which are apparent or feared there. The fact that recent capital issues have been oversubscribed requires more than this fact alone to make it an assuring omen. It may mean that there has been an insufficiency of opportunities for investment as compared with, the funds available, and if that is the ease it is not surprising that the drains have overflowed. That happens at any time in a flood period, but floods are not a healthy condition. For instance, new capital offerings during the month of May amounted to £23,700,000 as compared with £3,300,000 in the preceding month, and £24,200,000 in May of 1934. For the first five months of the current year the total, of new capital offerings in the London money market total £69,200,000, as against £60.200,000 for the corresponding period of 1934, representing an increase of 15 per cent. But this increase should be regarded in its relation with the relative position, and when it is done the present increase does not look to be very inspiring. For instance, this year’s figure is still only slightly half the total for the first five months of 1930. and approximately 40 per cent, of the figure for the corresponding period of 1929. When considering the capital market the total figure is of interest, but what is of greater interest is the disposition of the capital invested in the new issues, and before that is considered it is unwise to draw conclusions.