BANK OF N.Z.

Press, Volume LXI, Issue 18413, 20 June 1925, Page 9

BANK OF N.Z.

ANNUAL MEETING.

CHAIRMAN'S ADDRESS.

(special to "the pkess.")

■WELLINGTON, June 19,

Tho annual meeting of shareholders in tho Bank of New Zealand was held at the head office of tho bank to-day, Sir George Elliot, chairman of directors, presiding. In his address the chairman said:—

The issue 'of the new capital,- viz.. 375,000 Preference "B" snares and 7.50,000 Ordinary shares of £1 each, which was contemplated last year, has been successfully carried though. The amount, £554,465, appearing under the headng of New Share Account in the balance sheet, represents the purchase money of new shares applied for up to March 31st last. The Application List did not close until April Ist, and allotment could not be made until a certain time had elapsed. Unfortunately, a small number of shareholders neglected either to take up the shares to which they were eutjtlcd, or to dispose of their 'rights' before April Ist, and, as the Directors were afraid there might hare been some misunderstanding'in the matter, they decided to extend until tho 30th of June the period-in.which the option to purchase or dispose- of tho new shares might be exorcised. ■ •So far,! 743,447 ordinary shares have been applied for. Shares- not applied for by June 30th, and the fractional shares, will be. offered by tender .to holders of Ordinary shares on tho Register on the lOtli of July next. \Vheii the new shares are allotted anil the past year's profits are dealt with, Capital, Reserve Fund, and Undivided Profits will stand thus: — ; '■ ' - '■' £ Preference 'Capita! held by' ' ■•the Government : of New ■ "Zealand .. ..' 1,570,000 Ordinary Share Capital. .'.,. 3,750,0d0 '4 per cent. Guaranteed Stock 529,98S Reserve Fund -.. • .'. 2,575',000 Undivided Profits .: •..' 513,295) '.A total.'of .. £9,243,287 Thd profit earned from the ordinary operations of the .Bank for the' past year to £819,285. In comparing. thW' profit with that t of the previous ye'jir, it should be remembered the ycarurtder review is the first complete year diiring which wc Lave had the .use of, the £1„125,000 of new capital paid up, on October Ist, 1923, and the accretion to : ; the Reserve- Fund of nearly £1500,000, made a year.ago.

Our deposits at the Balance date totalled j(i30,079,282, as compared with £30,501,719 in '':l924—a decrease of £422,437.1 . Deposits from the public showed a, satisfactory increase, but Government deposits arc £1,923,003 less than 'jn the previous year. Of thej increase made by tho public, amounting' 'to £1,500,560, about half'is on'.Fixed: Deposit and the. other half is iii; current account balances. This increase may bo regarded as satisfactory* Xt; reflects to some dogrce the prosperity experienced by our farmer customers the past year. Advances 1 amount to £19,329,186, as. compared with £18,787,100 at March ■3lst,. 1924. ..!-,..' It might, perhaps, have been expected ..that; the ! causes which brought .■about••'■the' iiicreajso in"-'- our "deposits .would-have 4lcd {o.a shrinkage in our 'advances,,;; but, this has not been the lease'. "\Vliilo many old advances had jbc.eiis paid off or materially reduced, 1 fresh/ advances made during the year |brought the total;up, to a slightly highcr : level.'than! it stood at a -year ago. It' would be .noted, however, that deposits exceed. advances by a larger amount now j they ■ did twelve months ago. , ' The movement; 'in deposits (other than Government (deposits) and advances of tho'six'Banks that dp business in New , Zealand," were disclosed by the Government Quarterly Returns for the past five years, which are as follows: i J . Excess cf Excess of Mch. Deposits. Advances. cdvatijcß. deposits. £ £■ £ £ 1921 47,1'55,000 52,446,000 5,291,000 1922 40,360,000 46,491,000 6,131,000 1923 43,465,009 .42,521,000 944,00(1 1924 47,033,000 44.403.d00 2/30,000 1925 49,897,000 43,730,000 G,1G7,000" \ ■ t

The chairman referred to the Dawes report and'; tho resumption of the gold standard, one result bf*r which was a fall in the rate'for buying; bills on London and for seeing demand drafts on Australia, lie remarked upon the benefit of this to the exporter, and added the following as to the •. currency - position here: "Tho circulation'of notes in New Zealand instead of- gold caii be of no pecuniary loss to anyone, saves wastage of the metal," yields \an ' important amount in tax'to-the Slfcte, and enables the Banks, to afford inpre accommodation to.their customers than they would have been able-to dojif, in addition to what is legally .necessary to hold, they' were callod. upon to.'deplete their reserves iu order t'o. pro vide sufficient gold for circulation. \ ■ j ' -

The.proportion of gyld, that.must be held* against notes'in circulation in New Zealand is ..one-third; Jas a matter • of fact, the gold and, bullion held in the Banks' in the. Dominion 'at March' 31st amounted'to £ 7,727;90j4,- and the notes outstanding amounted to £6,694,044. After dealing with our. primary industries, the chairman i made, some interesting references to ; our . oversea trade: — > i i .

The ■ following tables! show, for the year ended March last,'the import and export of goods to and If fom New Zealand: — ' '

Imports. Imported from. Percentage. £23,522,840 United Kingdom. 47.2 £13,408,123 Other Britifeh possessions' 26.9 £12,890,132 Foreign '; countries! • 25.9 Exports. Destination. Percentage. £43,681,219 United Kingdom 79.8 ..£3,851,432 Other British possessions 7.0 £7,238,507 Foreign countries ; 13.2 The relative positions for previous years have been: — ' Other Imported United British . Foreign front Kingdom. Possessions. Cntries. P. Cent. P. Cent'. P. Cent. 1900 • 61.9 24; l . . 14.0 1910 60.1 25-5 14.4 1915 54.6 -26.1. 19.3 Exported to: — ■ ; ' P. Cent. P. Cent. P. Cent. 1900 78.7 . 16;0 ■ 5.3 1910 83.5 11.3 5.2 1915. •' 84.4 9.6 . 6.0

It will be noted that while last year New Zealand sold to the United Kingdom.79.B per cent, of its total exports, it purchased from the United Kingdom only-47.2 percent, of its total imports. New. Zealand levies an average customs duty of 20 per cent, ad valorem on most goods"imported into the Dominion from the British Empire and, by way of preference to the Empire, a- further ad valorem duty of from. 10 per cent, to

20 per cent, is levied on goods imported from foreign countries. For example, boots and shoes manufactured within the Empire and imported into New Zealand pay a duty of 25 per cent, while those imported from a foreign country pay 45 per cent. British goods, therefore, have a considerable preference. It is claimed by many otherwise wellinformed "persons in the Mother Country that the New Zealand customs preferences are more apparent than real, and that their abolition would not materially affect British trade. They assert that our tariffs have been framed primarily with the object, of stimulating local industries, thereby shutting out British goods, and that the additional oO per cent, levied on similar goods of foreign manufacture is in reality no preference at all. It is wonderful how this idea has spread in Great Britain, and how all sorts and conditions of people believe it. Whatever may be the truth of this belief as applied to other parts of the Empire, it most certainly does not hold good in regard to New Zealand.

Thero can be no doubt that, if preference on British goods were abolished in New Zealand, British trade with us would fall very considerably. Although it would have amounted to ,the same thing in the end, it might h:vvc been wiser in the beginnim;;, because more understandable, to make a general increase in duties, with a rebate on goods manufactured within the Empire. After a survey of the figures I have just quoted, one cannot help • feeling that, in spite of custom preferences, Great Britain, though still far ahead of her competitors in this market, seems to be losing the position she held in 1900, or even in 1910. Such a condition of affairs should receive the earnest attention of statesmen both in the United Kingdom and in New Zealand. The advent of the motor-car considerably affected the position of British imports to New Zealand. The total imports, of motors, spare parts, and benzinc for the year ended December, 1924, amounted to: — £059.745'fr0m the United Kingdom. £'5,0*32',003 from other countries. In 1905 the proportion was 57.9 per cent. United Kingdom, 42.1 other countries. In ,1910 it was C 8.2 per cent. and.31.8 per cent, respectively.. I think one of the reasons for the loss of British trade in motor-cars is to be found in British legislation. It lias been stated reasonably by leading statesmen and business men that-the solution of the problem of trade stagnation iii Great Britain must be found outside. Parliament niid'by manufacturers themselves. l I think, however, the British Parliament itself, with the best intentions in the world, dealt a blow to the motor industry, which it still staggers under, when it passed legislation charging owners of motor vehicles an annual license fee, .of £1 per horsepower.

I do not suggest that tlie annual license fee charged on motor-cars ,in the United Kingdom is entirely to blame for the loss of British motor trade in the Colonics, but I do suggest that, without a. doubt, it has been a factor in that loss.

To meet this legislation British manufacturers concentrated their energies.on producing, a type of car which, lias proved satisfactory to British' users, but apparently is not popular with users in this Dominion. Until the position is realised by .British manufacturers and a car is produced, which will suit both English .and Colonial conditions, the present preference for non-British cars will doubtless continue. It should be borno in mind that the output of a wrcllequipped. factory controls, costs.. The loss of the Colonial markets must lessen the output of, British factories, and the .c-.ost..price -of each car.-.iu.ust-a.ccoxdingly : bo greater..-' •, ' -'. .New Zealand, as.l havo said, sells tho hulk of her products to" the United Kingdom, and anything that affects the trade of the United Kingdom affects New Zealand. New Zealandcrs, therefore, are almost as seriously concerned in tho conditions existing in Great Britain as the people themselves who are iiving there. , It is of vital, importance for the welfare of this Dominion that tariffs should bo so framed thatj whilo' giving our 16e?.l industries a fair measure of protection,- they should not boar .unduly on the -commercial, activities of the United Kingdom. ■; It.m.ust never be forgotten that if wo are to Tiold and increase our exports to Britain, wo must on .our part take Brit'ish goods in exchange. , Now' Zealand has been called "The Daily Farm of tho Empire," just as the United Kingdom has been called "Tho Workshop of tho Empire.'' if the "Dairy Farm" is to flourish, it is essential that the "Workshop" be kept busy. . '...,'...- ■■ .Six and. a-half years after the war, Great. Britain, among the belligerents, is practically the only nation that lias not got . back to pre-war trade standards. .At tho . present moment she' .has.' over- 1£ millions unemployed; each one of this grent number receives a weekly wage or dole from the State, while day, after day, .according to tho newspapers, contracts for the building of ships, engines, etc, trades in. which. Great Britain excels, are being lost to Continental contractors. As may be seen from the statistics I .have quoted, even New Zealand does riot purchase from the Motherland the same proportion, of her requirements as she -did 15 years ago. It was- recently reported-that-• Mr Hoover. Minister for Commerce in tho Government of the. United . States, •strongly advocated that Americans should liivc to themselves, buying as little as possible outside their own country, even if'it meant a curtailment or their export trade.. Let us hope this report does not represent the opinion •of the American people generally; but, whether it does or does not, it is a fact which one cannot blink, that, the objective of manufacturing nations is to sell as much as possible to outsiders and to buy as little as nossible from them.

The. majority, of the people living in the United Kingdom firmly believe in Free Trade. 'On this principle they have built up a great manufacturing nation and, if world conditions were the same as they were even 20 years ago, for themi a. Free Trade policy, might still be the best. But conditions the same. Practically every foreign country is slowly and surely building high custom tariff walls round its boundaries, and, as a consequence, British trade is suffering. I bdieve even British Free Traders would agree to a customs. tax being levied against foreign goods imported into Britain, provided Free Trade could be arranged throughout the Empire. This nolicy, however, would sound the death-knell for certain Colonial industries, arjcl it would be difficult to carry it into effect; but it is obvous that unless British industry is fostered, Great Britain cannot continue indefinitely to be the splendid market that she lias been for Colonial produce. With a large National debt (half of it incurred on account of the late war) New Zealand cannot, even if she so desires, be self-contained, for she can only pay her external debts and the interest on them by the export of wool, butter, clieese, lamb, mutton, etc. At the present moment the Mother Country of the greatest: Empire ■_ the world has ever seen is suffering the aftermath of a great tragedy, but, looking back over the records of .her past history, none need doubt that the genius of "her peoDle will bring her triumphantly through this time of stress and strain. In the statistics I have,quoted there is»a point that calls for more than passing consideration. It is this, that while New Zealand last year purchased from "other British possessions," 26.9 per cent, of her" total imports, she sold to them only 7 per cent.-of her total

exports. The volume of trade is heavily weighed against New Zealand, and the question naturally arises, "Gould not such adjustments be made as would help to bring these imports and exports nearer a parity?" It seems to me that it. might be possible to make a quinquennial adjustment of our customs tariff, which might be based on the conditions of trade that had existed during the five years between.- the separate British possessions and New Zealand. Suppose, for instance, we purchase' much from a British possession that buys little from us—we import certain articles from that possession, and thus reduce bur purchases of similar articles from Great Britain or other parts of the Empire. Under '' such circumstances I suggest that a special reduction in the Customs Duty on those specific articles might be made ' in favour of Great Britain or other parts of the Empire concerned. At the present, time the Old Country is bj; far our best customer, and should receive, greater recognition of that fact. '

I can - appreciate that there would be considerable difficulty in arriving «t a satisfactory adjustment of tho position, for many factors are involved, but. as long.as care were.exorcised in seeing that imports of all raw materials were safeguarded, such as sugar from Fiji, jute from India, paper and'timber from Canada, etc., the difficulty should not bo insurmountable. ■ He concluded with some, general ol>scrvations on tho outlook: —

THE OUTLOOK. For the year ended March last oiir ipt.ports ' amounted to £49,8'21,095, while', our exports totalled £54,771,1.58., the difference in our- favour being £4,950,063; It must be.obvious that this surplus is quite inadequate to meet the amount which: is annually required to pay interest on loans raised iby the Government and Local Authorities outside the Dominion.

It is. true that towards the end of .the financial, year there was a considerable slump' in. the price of certain of our primary products, and that a fair proportion of our exports was held over in the hope of a bettor market developing in the near future; but, even if prices had been maintained, and all the goods in, store been shipped, though the relative position would have .been improved,. the final balance would still have been insufficient to justify an optimistic view of the position at the present moment; .Any advice as to the need. for general economy is unpalatable. It has been given so often that I am afraid it falls on deaf cars., In New Zealand there is not the slightest doubt that, in private life, people are spending too much on imported luxuries,- and it is time to call a halt aud consider the position. ..'•'_ Now Zealanders particularly dislike the idea of trusts and combines, and rightly so; but wo must not forget that anything in the nature of a trust is also disliked in Great Britain. It would be unfortunate if the formation of pools for the management and sale of all our products were carried to such extremes as to impress our customers across the seas with the idea that, whatever the conditions were in New Zealand, we intended, either by flooding the market or by keeping it bare, : to extract the last penny possible for our wares. Let me say again, that the United Kingdom is our. great market, and by ordinary methods we have built up an increasing business there; but if the idea gained currency that we intended to exploit it for all we were worth; it is conceivable that the people generallv might. refrain from buying New Zealand products and turn their attention to other lands , for their requirements. They have ojrown accustomed to the ordinary rules of supply and demand, and they bear with equanimity soaring prices when supply is short, but .they expect the natural fall in values when the supply is plentiful. The. proper storing, shipping and marketing of our wares is essential, but the greatest care, should be taken to avoid even the appearance of price-fixing or market rigging,,more especially, at .the present. time, when everything from New Zealand is popular in the Mother Country, and when attempts are being made to draw the bonds of Empire closer, oconomicallv as well as socially. When I was in the Old Country recently I- noticed with much gratification 'the high esteem in which New Zealand and New Zealanders were liold. Without a doubt this favourable impression is to be traced to the men who went overseas to fight the (battles of .the Empire, to the way' they lived, and to the way they died, .and it behoves us that we- should be extremely careful in the future that we do nothing to alienate the goodwill so engendered. ' "We are gradually settling down to the even tenor of our ways; bit by bit we are getting back to conditions which prevailed prior to 1914. New Zealanders possess a great inheritance; a productivo - country with an equable climate, where extremes are unknown; a land of fertile plains and smiling uplands; a people of fine British stock as :pur© as that to be found in the heart of England. We have many valuable assets, and if, minding our own business, we exercise ordinary, wisdom in the general management oir our affairs, the- future welfare of our country is assured. ."We shall naturally have ups and downs like' others, but if we work and strive with a due regard to the unity and

well-being of all the varied sections of our mighty Empire, wo in New Zealand must, in the general prosperity of a united people, reap an abundant harvest.

In seconding the motion 3lr William Watson said:

"In his excellent speech, the Chairman has touched upon—somewhat lightly. I think the financial resources of the Dominion in connexion with its expenditure. "When, as pointed out by him, the value of the exports only exceeds that of the imports by a much less amount than that required to meet the interest payable •' outside the Dominion, it is surely time for sensible and honest persons to pause and consider. Much has been said about the cost of living, and some people will glibly remark that it is the same all over* the world, but I am not so sure about that, and, in any case, I am dealing with New Zealand only. • In addition to the materials produced, manufactured and ■•used in this Dominion, it must bo acknowledged that £49,800,000 is much too high an amount to pay for imports during one year, and there Can bo no doubt that a very larsro portion of these imports consists of luxuries, and this, to a considerable extent, from. ' foreign countries, which in the circumstances, arc not only unnecefwary hut positively harmful to the future welfare of'the countrv. Possibly bankers, as well as merchants and others, reap temporary benefits from the present swollen trade, but it is surely at the expense of the community, if its income does not meet its expenditure. Further, if tho high rate of living bo allowed to progress, and . wages bo raised .in accordance with it, the production of our exports will becomo so expensive as to prevent our competing-with.'other countries." •■--.■ ,i ■■• '■.,;■. -.■■■■■ ■. Tho report and balance-sheet wereadopted without discussion. . A vote, of thanks to the directors and staff was unanimously passed.