ade its impact in 1952, and by the beginning of
last year , e position had been reversed. The 1953 Budget was amed on the calculation that there was room for expansion in the economy, and it was then rather more a matter of con- cern to find borrowers willing to take up loans. By the end of the year there were reports that a certain amount of competition
for advance business had sprung up among,,bankers.
1 One section of borrowers that may have continued to suffer t the curb of qualitative credit control for longer than the rest is that classified as ' private and professional,' though even here there must also have been a considerable deterrent force 4in the prevailing high rates of interest. It is noteworthy that in the three months to mid-February this year this group recorded its first upward movement since November, 1951. This has been interpreted as a sign that the last vestiges of the Policy of restraint are about to disappear.
By itself the decline in the general level of advances over- states the reluctance of individual businessmen to call on their bankers: it must not be forgotten that the nationalised gas 'and electricity undertakings borrowed £205 million in the Market and were thus enabled to pay off bank indebtedness of the same order of magnitude. It is none the, less significant that by February of this year bankers' advances to public utilities other than transport were already double the low figure to which they had been reduced by last November.
Most other categories of bank advance have since the turn Of the year begun to move upwards, a result that may become More pronounced if the present trend of commodity prices is Maintained or accentuated. It is to be expected, however, that industrialists will continue to exercise a considerable amount 01 caution over building up stocks of materials. A further indication of incipient expansionist tendencies in the private sector of the economy is the recovery in the banks' holdings of commercial bills, which grounded at £53 million in October but by mid-May had reached £87 million. There has also been some revival of acceptance business, a type that suffered 't Particularly sad eclipse during the worst rigours of the dis- inflationary period.
TOWARDS CHEAPER MONEY
The predominant item among the bank's assets remained Investments, which accounted for 33 per cent. of total deposits at the end of 1952 and have since increased to 35.4 per cent. I he biggest factor in their increase was the Government's con- Version operation last October, which raised the banks' total
rtfolio from £2,137 to £2,238 million.
The entirely voluntary support attracted by this scheme was further convincing indication that the spell of high interest tes introduced in the early days of Mr...Butler's Chancellor- had done its work and that there could now be some xation. The bank rate reduction in September had already ared the way for this development, and in view of the ncellor's professed belief that there is still room for expan- in the economy the recent further cut, bringing the rate wn to 3 per cent., seems a logical enough step. Oiust always be their first consideration, but if the banks are to r,, ?lay their due part in financing new enterprise their shares can- risk be regarded as altogether excluded from the category of risk capital. It is therefore only reasonable that investors in them should expect some of the rewards associated with that description. If their claims serve to remind managements, the authorities, and the general public, that the banking system, far from being a mere utensil of the Treasury, is an integral ,Part of the machinery of private enterprise, they will perhaps have served a wider purpose.
Previous page
