B—l6

the end of the financial year being £l-7 millions above the figure for March, 1939. Holdings of other securities have fallen from a peak of £2-5 millions in June, 1944, to £l-7 millions at the end of March, 1950. The trading banks' advances and discounts increased by £6-5 millions during the year to a total of £96-1 millions, the seasonal rise during the March quarter being greater than usual as a result of abnormally large advances to finance wool purchases.

Classification of Trading Banks' Advances as at the Last Balance Day in March (£000)

The most significant changes in the above table are the reduction in advances to farmers (especially wool-growers), the increase in advances to importers and retailers (reflecting the improved value and volume of stocks held), and to " Other manufacturing and productive industries." CONTROL OF ADVANCES The policy of restricting certain classes of trading bank advances was continued throughout the year. In August, 1949, advances to enable primary producers to purchase essential farm equipment and machinery were removed from the restricted class, provided that each individual advance did not exceed £1,500 (including similar advances still outstanding) and repayment was made within two years. During March, 1950, an administrative change was made. It was decided that it would no longer be necessary for the trading banks to refer to the Reserve Bank in cases where the term of the proposed advance did not exceed two years and the amount applied for did not exceed £2,000. In exercising their discretion in such cases the trading banks were expected to apply the general principles of advance control, which remained unchanged, but were authorized to use their own judgment in dealing with marginal or doubtful cases instead of referring them to the Reserve Bank. Further changes effected in May, 1950, are recorded in an Appendix to this report.

8

• — 1947. 1948. 1949. 1950. Farmers 21,626 20,030 19,313 17,305 Dairy companies, freezing-works, &e. .. 8,847 8,255 9,212 9,908 Other manufacturing and productive industries 12,968 20,159 23,002 25,931 Merchants, wholesalers— (a) Mainly importers 4,262 7,962 5,925 7,578 (6) Others 1,402 4,924 2,155 2,829 Retailers 4,645 9,505 7,659 8,258 Transport 1,250 1,752 1,893 2,145 All others 17,637 19,933 19,586 20,695 Total advances 72,637 92,520 88,745 94,649