BANK OF NEW SOUTH WALES

Dominion, Volume 8, Issue 2332, 14 December 1914, Page 8

BANK OF NEW SOUTH WALES

At the half-yearly general meeting of the Bank of New South Wales, held at the Chief Banking; House (Sydney), on November 27, the chairman, tie Hon. Sir Charles K. Mackellar. Kt.. M.L.C., president of the bank in moving the adoption of the report, said:—Yon will observe that the coin and cash balances, including Australian notes, are more by £2.290,000. There has been an increase of nearly £1,600,000 in London, and shout £800.000 in Australasia. But the short call money in London is £525,000 less. The increase in cash resources in London has been brought about by war conditions. Money which in normal times would have been at short call hae been held in cash at the Bank of England or our other London bankers to meet our vnriod requirements in connection with Exchange business outside Australasia. And. hero I would like to sav' tha.ll the prompt and sagacious action taken by the British Government, in cooperation with tho :Bank of England, to provide facilities for flnanoine tho trading operations of the Empire, has . been ,ibo means of enabling banks, and others, to make such a use of their trade bills of exchange and short call money in. London as is exemplified by our own cas-h figures there, to which I have iust referred. Tho other items of what wo classify a 6 liquid resources show no great change. The total nnder this .head amounts to £21,779.988, as against £20,363.573 last year-an increase of £1,416,415. ' It will be found that in tho cash items there is an increase of £262.000 in Australian notes held. In tho past the use of Australian notes for currency purposes has been very limited—as. in- fact, was the use of the old individual bank note for some time prior to withdrawal. It is probable, however, that there may be some extension in the future. and so far as this- is confined to the use of the 'note in the ordinary business transactions of the community, the operations can be carried out to a considerable extent, and without any economic disturbance of the currency. But though there may, bo some enlargement of the note.. ourrency in this way. wo feel assured that 'those who have tho control of it realise the prime - necessity- of-keeping the issue wii backed up by gold, and within reasonable limit" of amount.

The British and other Government securities have not varied in amount. There has, of course, been some drop in the prices since the war beran. and in -the absence of a definite market it is not easy to determine at what 'figure they should be appraised. We have always made ample reservation for these, and on last half-year's fieures had a lar;e surplus.

We have increased our reservations still further this half-year, and belinvo that wc have done all that the situation calls for in the way of provision. '

There is an increase of £1.820,000 in advances, including bills discounted, bills receivable, etc. The ereater part of this accrues Ma the earlier period of the year. The situation demands that wo should pursue a. conservative policy towards new business; at. -the same time we are meeting tho legitimate normal requirements of our clients in every reasonable way.

It will be satisfactory for you to hear that the amount of transactions outstanding through exchange business entered Into before tho war aeainst goods carried in foreign bottoms and for foreign account is very small compared with our total business. Wo do not anticipate any material loss from this cause.

On the other side of the balance-sheet thcro has bc.en a. slieht increase in the note circulation in New Zealand, where alone we now issue notes. The Government measures In the Dominion for relieving financial strineonc.v took the form of cnlarEinc the use of individual bank notes, and have proved satisfactory. Deposits have increased £2,720,000, well Kjiroad. and with a jrood proportion of fixed deposits. .

Bills payable and other liabilities, including' other balances, are higher bv £425.000,. mostly in bills payable.

With. regard to profit and loss, our rccommendation i6'tkat £50.0011 be placed to reserve fund, making it £2.5C0.000, and that we carry forward- a larger sum than usual. . There is no particular significance in ■ this beyond .our belief that at this juncture, when tlie outlook is more or less unsettled, and difficult to gauge, it is betto. to increase the unallotted portion of profit and loss rather than fix It in i.ho reserve fund.

The. situation caused by the war is, of course, unique, and outside the experience of 'anyone amongst us. It lifts proved a. tost-for all. and has brought tho Erapore together in a. way that nothing eleo could have done.

Those in charge of the national welfare at, the chief seat of the Empire and tho Commonwealth and the other Dominions and Dependencies havo' risen to the great occasion. . . :It is too soon yet'to express an opinion as to the ultimate issue, except to say that there is good reason for looking to tho future with confidence.

At tho outset our own nniW hap been to co-operate in every suitable way v those in authority—Federal and State—and with our colleagues in tho other banks in measures for the general welfare. All have worked together to minimise the dislocation of business, which has been inevitable, and have fallen in with -u" : i n'oposalo uu seemed likely to be- of benefit to t community.

Tho emergency is undoubtedly a great one, but we have confidence that its varying phases will be successfully met as they arise, and so far as this bank Jo concerned I am justified iu saying that it was never in a. better position to meet such an unexpected tato of affairs.

Apart from the war disturbance, the conditions in Australasia have been to Romo extent un propitious. The wool clip has been a good one. but there will bo. seme difficulty in realising it. This will be ovevcome as time' coes on. thoiitrli there must be some drop in the price. Other primary products have dono well, but the wheat crop has been affected by droughljy conditions in all the wheatgrowing State 3. In our own State, anil some of the otiiorp, there have been good falls of rain recently in the areas affected, but* it is not exnected (here will be mnro than enough grain saved to meet our own requirement. The bank's own business is oo well enrond that such conditions do not. involve more than what we regard as o, temporary phase of "set back" to our constituents who are engaged in this industry, and we shall be rcvly to Afford them such reasonable financial aid as will enable them, taken as /'a whole, to meet and. retrieve, the situation.