THE OUTLOOK.

Dominion, Volume 1, Issue 235, 27 June 1908, Page 4

THE OUTLOOK.

The greater portion of the Chairman's speech at yesterday's meeting of shareholders of the Bank of New Zealand is taken up with an analysis of the excellent results of the past year's working. Comment upon the figures that ho quoted is hardly necessary, since those figures Bpeak for themselves, and criticism would b3 merely an emphasising of the splendid advantage that the Bank has taken of. the wonderful prosperity that has swept over tlie greater part of the world during the past few years.. A word seems to be required, however, upon the decision of the directors to use £200,000 of its abundant profits for the strengthening of its reservo fund. As was expected, there was some grumbling at tho disappointment of some people's expectations of a very heavy dividend. But banking wisdom differs in ono important respect from the wisdom of tho popular politician. He, when tho world is going well, cracks on all sail, and mortgages tho future with the enthusiastic folly of spendthrifts the world over. The wise banker trusts littlo to Fate: ho gives himself a wide margin of present safety and, as it wore, writes down the rosiest-seoming future beforehand. Nobody who appreciates tho importance to this country of a strong bank will bo other than gratified at the decision of the directors to make the building up of a strong reservo its first duty. The Bank does not show up well in tho " proportion of reservo to capital" when compared with other banks doing business in this country: it should lead in this test of stability. Nor should it bo forgotten that the present good recovery has been made in a period of the highest prosperity. 1 Good times may not —there are things which justify ono in saying with certainty that they will not —last for ever, and the Bank's policy should therefore bo a policy for the future. The representation of the Government is a much more debateable subject, but a conservative policy seems to be best secured by a .continuance until JDI4 of the present allocation of control, if it is, as Mb. MiETiN Kennedy's criticisma would

suggest, a guarantee that financial strength will bo placcd beforo the demand of shareholders for big dividends.

Tho most important portions of Me. Beauchamp's speech arc those in which he discusscs the outlook for trade and finance. There is hardly a hamlet in New Zealand which has not, during the last six months, heard tho furious assaults of the Prime Minister upon The Dominion. We have constantly preached a policy of financial prudence as an antidote to Sir Joseph Ward's unwise boasts; wo have stated, with all the emphasis at our command, that Now Zealand is prosperous, and in its nature stable, but that a ruinously extravagant and unwise Government can injure it; w'c have pointed out uic injurious effect of the American financial panic as a striking reminder that this country is not an economic Valley of Avilion, safo from tho tempests of trade; we have protested, and will continue to protest, against the Prime Minister's extravagant and reckless optimism. Sin. Joseph Ward has unceasingly misrepresented our attitude. He has declared that we havo pursued the " outrageous and abominable policy of decrying tho financial stability of the country." As a matter of fact, our policy was to decry the spendthrift disregard of common prudence which, if continued much longer by tho Government, will destroy that financial stability. He declared that the American financial crisis did not touch New Zealand, that we were outside the zone of disturbance. Mr. Harold Beauciiamp justified all our contentions yesterday. " Tho financial crisis," he said, " that convulsed the United States in October-December .last had far-reaching effects, which we in New Zealand are feeling'to a certain extent. There has been a marked fall in the majority of our staple. products . . . due to. the financial stringency in New York reacting on London, Paris and Berlin, and causing money in these centres to advance .to prohibitive and trade-paralys-ing rates." Having thus qualified for the receipt of a diploma of " disloyalty " of the first class Mr. Beatjchamp proceeded to involve himself still further in tho discredit of preaching caution to the people of this country. He noted that our exports during 1908 dropped to £1,570,816 less than the valuo in 1907. This must be read in conjunction with the great increase in our imports, concerning which tho New Zealand Trade Review had a noto of caution this week. Mr. Beauciiajip wont so far as to dcclarc that a sharp drop, in the price of building land will not bo an unmixed evil; the outlook, he said, was not so rosy as it was a year ago. He urged; that we have admitted, that the country can " face a set-back " very well. • But he' added in conclusion that " with a less buoyant commercial barometer, it is obvious that Caution should be our watchword." This was not a .pessimist who was speaking, but the Chairman of a bank announcing a year's working that showed a goodi sound dividend, allowed a generous writing down, and yet onablod the reserve to bo practically doubled; .'Everybody, will ljo struck by the -contrast', &tween','•. , |lßt! , Beauchamp's warnings almost have excused jubilation and lavishness, «nd Sir Joseph Ward's extravagant optimism in the face of a tremendous public debt, heavy taxation, a subdued market, and a check in exports. Perhaps the Prime Minister will " deprecate'" Mr. Beauohamp's advocacy of "blue funk," but the public will be well-advised to consider a warning that is the more impressive from the circumstances of its utterance. ' 11