RISE IN BANKING LOANS.
Among the favourable features of the past week, though it is one which, perhaps, suggests a limit to the upward move- ment in gilt-edged securities, was the publication of the weekly average figures of the Clearing Banks for the month of July. These figures show that there has been steady progress in the expansion of banking loans, which show an increase for the month of nearly £8,000,000, while the present total of such loans by all the banks of £971,000,000 compares with only £879,000,000 in July of last year. For some time after the turn had come some three years ago in the tide of trade depression the effect upon banking loans, which had fallen to an abnormally low level, was almost nil.
For this a number of causes was responsible, among them being the agreeable fact that with the return of greater prosperity to industry many undertakings which had long-standing loans against them were able to repay the banks, and these repay- ments, of course, tended to offset in the balance-sheet the effect of any new loans which might be taking place. And again during the period of depression the financial position of many of the leading undertakings had been strengthened by fusions which, among other things, provided for large reserves so that the early improvement in business did not cause an immediate resort to the bankers for accommoda- tion. Moreover, the extreme cheapness of money made it possible for many of these undertakings to float long-term debentures on very favourable terms to the borrower. Rather more than a year ago, however, there were signs of a greater demand for banking loans and, as already mentioned, the rise over the past year has amounted to little short of £.too,000,000.
It should be noted, however, that of this figure about £40,000,000 is represented by special banking credits to France which are due for repayment at the end of the present year. Still, the position is a more satisfactory one from the standpoint of the banks and bank shareholders.
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