A Very CriticalyYear-
_The "Statist's" annual international banking section for 1921 has now reached Shanghai, and in view of the extremely critical nature of the year under review it' is a work which ought to be in the hands of all interested in finance. In Opening its resume of the situation in 1921 it refers to the fact during the year the trade deadlock became universal, and then goes on to explain the effects thereof. It says:—As the same quantity of goods can now be financed with a lesser volume of credit, the majority of the banks whose balance sheets we review in detail have experienced in the most recent accounting period a rise in cash and immediately liquid items and a reduction in the volume of accommodation given to trading and commercial interests. The lessened demand for money is caused by the great contraction in business as well as by the fact that less money per unit of production is required at current lower commodity prices. Employment for surplus funds has, however, been found in many cases where "Governments have—been foreed to supplement their ordinary revenue by borrowing, but this compensating influence has not been quite adequate.
The result has been a decreased rate of turnover, of which further striking testimony is afforded by the decline in bankers' clearings in all the leading countries. This has meant reduced earnings in non-inflationary countries, and these earnings have. been further eaten into not only by commercial failures, but by losses due to the increasingly wide fluctuations of international monetary values. Banks in neutral) and other countries where currency depreciation is not so marked lost on the balances which they held in countries where the printing-press is in active use. There were, large in, addition, speculative dealings in foreign currencies by the outside public, such dealings being equivalent to an advance to the country whose currency was purchased of capital, free of interest, in the hope that the foreign currency would immediately or ultimately rehabilitate itself.
Tue Vatve or ExperigNor.
Reference is made to the number of American banks and trust companies promoted during the war to finance import and export trade with foreign countries, while some of the largest individual banks established a system of foreign branches or subsidiaries. "For a time," remarks the "Statist,'" all went well, but the wholesale, cancellation of contracts that accompanied the trade depression led to the return to American drawers of drafts that had been dishonoured by foreign buyers in respect of goods fin-
Text read from the printed page and cleaned; old type leaves the occasional error.