BANK OF NEW ZEALAND

Hokitika Guardian, 15 June 1923, Page 4

BANK OF NEW ZEALAND

| AN MAI, .MKKTIXC OK I‘liOI PHI RTO.It.S. I; | WF.I.LIXOTOX, .Juno 1.5 ji At tho iinniuil moot it)." of proprietors | I lioltl 10-day. Sir Oeorge Elliott. ( liairI j nnin of Directors, presided. I AA [tit the consent of the meeting, j the re pi ift of the Directors and the | balance sheet wen- taken its read, j Iho ('hairman, in moving their j ndiiption. said the report of tin* !)iI rectors and the hahtnoe sheet Inr the ji year ended ills) March l;i-t having j ho.'ll circulated you "ill Inivo seen j : i i'eni tho rep-ii'i : hat it is propo-cd to | • pm ioi iho poll year the same rale in j | 1 17 i 1 1. -i.ll ,i- tor tho preceding .'ear, | ; yi>;. . 11 * por colli 1 1 r ntimtiii on t 111 j Pioteivtti',• "A " Sharc«i. and fwo slidI : linos p, !■ ..Imre on the I’l'cforonee | i shares... hath of u liieh issues are li hold I.v the (oo.crnniont of New Zeaj l land - a.ml 'J- ml share on the <>,■- I diit.'iv Shares, and the proporl innate | I dividend upon i lie Preference "li" | wore paid in Peeemher last. I | Compared uilh the two previous I j wins, h|s| year simil'- a considerable j; faliino-nil' in prill'll. Jins e aoooimted j ; |nr childly hy loss <,i interest e, ill sell ipioni nil the redin-t inn during the past | year nf nver l liree millions in mir ad- | valines within tiie Dominion : l>y rej duetio.il, 10.0, since the New Near. in ihe rate i> 1 interest charged upon our | lies! accounts, and hy the lower rates j olitainod inr a large ptnjiiirtimi ni our ! funds in l.nudon. I dim policy ni the lioaril i- to mainj lain a posit inn ot gi'eai strength and never to Mthordinato satotv in profit. I To I ills end wo loop a la rye port ion in ; our resources ill a readily reah-aMc j term, oven though hy so dm me out I prnlhs stiller. 1 11001110 tax hi Ureal I’.nlain, A tit—- | tralia and the Dominion has heeti re- | diU'ed : hilt, nil Ihe other hand, we have Imind it iirf -siry to make eonI -el era'.le pi .e-i .me I * l l )• •. -d'h lo ' - nlnr'-t all of whir!i arc hi 'esp. ot. o! our large i oral hiisine.". The proposed addition oi L'FjO.OOO to the R: sr-rve Fund will 1 >ri• i;t (he Fund up to C 1 ~s“2o.oiu. Tile balance carried iorwanl shows n -light reiluetioii and now is L' ldl .9n7 - - e sum more than sufficient to pay n year's dividend. We do not propose on this occasion to write down our Lauded Properly and Premises which figure in the halaurc sheet at nearly t liroo-rpiariers of a million less ihau the Land lax ! i a 111 at in it. STAFF. ! The IF,nrd has marked its appreciaj lion of the work ol I lie null' hy granl- : inp hmiusi's in all the momhi'i's, with I ihe oxceplion of the iunior unmarried men. These junior ollieers receive vearlv increases mi a fixed scale until C'J7(I in r annum is reached : moreover. I hose who show marked ahilitv are eiveu a higher rate oi pay than is provided hv the scale, and it is fjralily i in; to know that this recognition ha- In cm deservedly eained I>v a large proportion of their immher. Our aim j is to have a thoroughly efficient -tall and we (lii not grudge the iuere.'i -.ed I liny which good work warrant-. | You were informed at the Shareholders' .Meeting four years ago that we intended to erect in our Wellington banking-chamber a p,‘rmanei.it memorial to those of our Staff who. during i the Ctreiil War. losi their lives in the service of ilicit- country. The 1 1 ro 11 xi• lahlel which forms the eenire of the .Memorial had to he oht ained from England, and there was .Some delay hofoi'e it arriveil in the Doiu.nii.ii. Further delay was caused (.wine to difficulties experienced in procuring the particular New Zealand marhle. which was I bought to lie the most lilt inw material for the surrounding work. These difficulties have, however, lieeu surmounted, and a few weeks aL':o I had the privilege of unveiling the Memorial in the presence of a large gathering. Deposit- show the sat isfaeior.v in- . eroase of Cl .ffl?7.tl*2.J. i A DY ANDES. .Advances within ihe Dominion. . which in IL2I reached uncomfortably i high ligiires, show a decline of td.ol],r.iiil for the pii't year, hut the posi- : tion is hy mj means >o satisfactory re the hare figures might indicate. The i reduction is due ohielly to repayment i of the exceptional advances made to i traders during the period of over-im- . port at ion in lfklti-1921 and to the im- ( proved returns received for their pro- t

tumors. CONDITIONS J.\ Til K DOMJXIOX. Since our hist annual meeting there lots been a marked improvement in fi iia ’trial conditions in the Dominion brought about escpeeially by a greater demand lor wool, with it eon-,ocjliont advance in its price, ami by a largely increased output of milk products. The imports into Xew Zealand during the year show an increase over the figures for 1021 2, but the exports show a still larger increase of U.7-li;.;?M, so that, on the whole, the balance of external trade is in favour of Xew Zealand to the amount of £?.-573.117. I shall not make any comparison of last year's values of imports and exports with those of the pre-war period, as such a comparison, owing to the reduced purchasing power of money, would be likely to mislead. The substantial surplus of .€1,31/5,683 in the Dominion’s revenue over expenditure is also a matter for congratulation. Notwithstanding this, the people of the country should not be mislead into supposing that the

necessity lor a maximum ol economy in li.it!i public ami private expenditure has passed away. The recovery irom the severe depression of two years age I has been too rapid to he allogethei wholesome, and it would he unfuiTunate if the lessons of that period wort too puicklv iorgotten. Not withstanding the optimistic reporis which liavi recently been published, and the -plem did increase in the value o) wool, conditions all the world over are lai 100 unseLiled to warrant the assump lion that the present price ol eommo dilies will he maintained. Tlie nuinher of hankruplcies during | |a-t rear has been larger than usual ! and the published figures hy no means represent all who have failed. Numbers of funnel's—many of them Hemmed Soldiers deserving the best ol fni lulls* ham been obliged to surrender their holdings, thus losing all theii hard won savings. 11l ol her eases, vendors have eiilieelled a proportion ol ihe purchase money to induce purchasers in < at ' V on. Mo-1 branches ol whole-ale trade an now on the high road to lecovi iv Iroiii the over-importations ol I!)20-1 h'JI. and arc giving promise of steady progress. It i- a trihute In the sound liuaneiai standing of the community as a wl.oi. that sucli an exceedingly large pr<> poi t ion ol our trader- have surer-si ni- !\ emerged Irom si -even: a ep-is. Heavy los-e- ham l.ecii made. inn. o" the hum pari. I hey have been la.-ed with a surprising equanimity and with a oetermination to profit bv the 'cs-uu. The liuaneiai storm passed lightly over he let ail traders. Local Itoilies ham arranged loans ‘luring ihe year to the extent ot several millions, a portion of which was nil .'ll : u Loudon, Imt the hulk in Australia or New Zealand, at rates vary,iig irom a \ |w r cent to ti |ier tent. HATH OF INTEREST. The minimum rate of inleivsl on bank advances in the Dominion was reduced to (it per cent on .'hd .lanuury !a-t. Tiie icdiuiinM ol Income dux I a I -.ral .10(1 the ploiui • of a HI I thcl I'edii. iion -h'lrlly, enabled us to rnhi'i the rate on a great many ovenlralts. Although lit tier cent is the quoted "minimum" rale, we tin not average n,;.i on the whole oi our advance in .Sew Zealand. Haul limes disclose Ill'wiispaeled weu hue- -is in the liuaneiai condition of many eu-lomiT- : so nnieii -,i thin, in sonic eases, we ham iouud it v-arv tor the lime being lo lorego iit I ere- 1 . hi others to make ‘u >- ,-inlitial concessions, the iv-uk being l (ml the average rate of interest earned ti*. our advances in New Zealand h:.- teen adversely aliectvd. There i- little probability of any further reduction in our advance rates while our overhead expenses remain so abnormally heavy. li is still dillieuit to borrow on fixed mortgage even on All per tent margin, ai less than lit pm- cent, henre it mti.-t he recognised lout our borrowing customers have little lo complain of since 1 hey have ihe advantage of paying oil their dniiy balances only and not on iho sum wo engage to lend them. Comparison is sometimes made between lending rules here and tho-e ruling in London, hut such eampar.son i- absurd, conditions being entirely did'ereut. Australian rates certainly hear a close relation to ours, although Hanks in New Zealand are subject h a much higher Income J'ax than they are in Australia.

In comparing Hank rales with tho-i charged hy private lenders and fiov einment lending institutions, the servin'*! rendered by the Hanks in eon dueling accounts are invariably overlooked ; if the public want facilities, they must pay for them.

J'he rale of interest on mortgageunder the Aloratorium, which expires next year, is fixed under the Act at lit per cent. It has been snggcstci' that the rate may fall when the Act expires, hut unless there is also u decided fall in Australian rate- this is. unlikely to happen, for mortgage rates, .like the overdraft rate in New Zealand, are to a large extent governed by those ruling in Australia. Undue pressure on large lending institutions here to reduce the rate of interest Would have the effect of driving money to Australia for investment. J'he fact must not lie overlooked that a reduction in the lending rats isooner or later followed hy a reduction in the deposit rate, and those peopk who are ,~o insistent that the lending rate should he reduced should not lotget the 700.000 depositors in the MOffice and Trustees' Savings Hanks—the thrifty frugal people of small o moderate means—who would suffer from reduction in interest rates.

In addition to the deposits of about £-18.000,000 held bv tin l Post Office ami Trustees’ Savings Banks. the Joint Stock Hanks also hold interestbearing deposits to the amount of about £'17,000,000. file claims of tlie fixed depositors receive a reasonable rate of interest must have the sympathetic con-idera tion of the Banks: and. as any further reduction of the lending rates would necessitate a lowering of the interest allowed on fixed deposits, it will be readily understood that the Banks are not disposed, for the present at any rate, to make any alteration. MORATORinu OX AfORT-.UGIfS. This measure, passed ns a temporary expedient during the War. ha? been extended from time to time fas beyond the period its most ardent pro motors anticipated. The Act has now leen in f ye fnearly nine years and does not expire until 31st December. 102-f. Indications point to considerable pressure being brought to bear on the Government for a further extension, but, in the opinion of the Board of

Directors of tire Bank, any extension would be a grave mistake. New Zealand, in common with all other parts of the F nip ire, has, since August, 1914. passed through a phenomenal period. .From time to time circumstances have arisen that have called for exceptional legislation, It is, however, now time to get hack to normal conditions, for it has been proved over and over again that, ns a genera! principle, legislative interference with the natural ebb and flow of business lias an ill-effect, reacting far beyond the immediate present. MORATORIUM ON DEPOSITS. The Act. providing for a .Moratorium on deposits was passed in 192 b when the financial depression set in. I’nqiicslinimhly it was the salvation ol many Companies and Firms which had been taking deposits from their shareholders, customers, and the public.- generally. The taking of deposits by traders as a general practice has grown in New Zealand d tring th- last t 1 n years to an ,i li.a.-lIOWH perhaps in any other

It yens estimated on the passing of the Monti .riii'ii Act that in New Zealand the total deposits with linns and companies, other than banking 'nst!tutions. amounted to not less than In millions. There are. of course, exceptional cases, hut ‘■peaking generally, the system is pernicious. Tt is dangerous to the lender as well ns to the borrower. Owing to the existence of the Moratorium on Deposits, thu-e who hn\t taken advantage ol it have had time to get their house- in order. Must ol them have considerably reduced their deposit liabilities hv the issue of shares and debentures. Imt sonic have not done so. and it is to F.e fcan-d they never will he able to do it. J'he Act expires Oil h uh m.-t. and one cannot help hoping that its i.,i-uiui will not be extended. ADHKT.rJTHAi, HA\F.

In October of last year an A t van passed bv the late Varliaiuent autboriyiiu: the' formation id “Hural Cremt As-oeiatinns." with Ihe idea "I euahhnL' f-i'-mers to combine lor the purpose m r'vtcit ing tlepe‘ iis and I . rrow ine other moiievs. and t If. n lending lo Me ni- mlii>iv of the A■ socialious ihe finals thus ehtained. | vmlv repeal wlial 1 -aul la-t J ere. 1 that I no obit ( t i -'U to the ineasui provi'l d • itch Hanks rely on their own re-oiin es ,r- other Hanks i.o. and lha ( ; tlmv arc -ohici io taxation. Xevertheles-. the fact lh.il the aci - vibe- of I!,C Advani -’s to Set tiers Department. have id eutlv been extend- «(!. onito uni.i*:m's-;u'v. in niv i.pillion, i he : -lah!i-hmeid of n.u Agio cultural Hank. Vflmn tlm hnrrnwel's' L cannot 1 - met by the Cuvernm lit He) art liient-. the Joini Stock Hanks, ordinary lender.-, the inrioit.Hi .;in'i :'i :,|'V com evil- who-c liii-ines.s it i- to loud iii farm laud and live stork, and tin. various ('o-on“rat ivc finance oi g;\!i■ -at on- ow ned and controlled by I'armiilw P.orrov. ers liiu-i la in a Lad way L It is safe lo -ay of the majoril’y of the.-" runners who a'v in (lillieult ies, I !ml they have had te.o much credit, not too little. I.AX'D VALUES. ! and values are. as von know, still a cou-tant soune of eonlrevei-y. It inot I'm a moment t .intended that ike Hanker- ,-iv experts in valuin'.; properI v ; Imt. i| a k ink; r i- I imiislu'd w ith tiie habine,'-sheet “I a iartuiog eiislomei' ami wiili I’rolit a: d Lo s fi.e.ili'eshowing the re: all of lit" customer's working during a -erics of years, iv , ii. li-':,illy form a pretty shrewd idea I,; . in- I the land. The s. rim:- rial shii;i".vdull sudden drop during April ami May in the vuL i"■ i.' iia i: y prodm e r ml mea t. om • again i iki.-t raU". the utiwisdnlii of earn the value of a seii-nu’s i.ulpllt i ; | ; . ■ ij■ i*'i‘ on t**iiiiiiii ari!y high prices. To-day wool i - iloie a 1 satisfactory price-. a mi iiriica! ion-, j-.unt to il ■ !;•■ me our mo-i profitable prndmo for l he next few' years : Inn it w mid lie in: - prudent i •,!<!. < I li h.oe t. lie value of sheep i' mill: ,i >; i the |i!‘-i'Ut a-oli's pie. cs f ir wool, lam' and mutton. All exparieiu e i g .n'st- ih.'.l. as tiie yeargo by, she 'pfarulers mii-t exp;-. ! again to cm uniter periods of lower prices. Si many instant cs of the evil eli'i.vi of the no nt Ilium in farm property I ime direei !y and indirm-tiy under the U'lliie of the Hank, that we :!d lie ealhuts indeed if we did not feel strongly on the point and do our lie.-', to provent a repetition oi the evil. DAfHY IX 111 'STdt V. I In ihe . hipnieiit of i he Daii;. inn In iltl-l r.v o| l hi- ' mint r\ I- a ma! tel oi such vital importatiee in the w hole I o’nmiii'ilv that the ( H > v, • r 111 m •;. t would Ir.' well advised to give :t everv rea-ou-a hie ;. '-tat* O. An ex. • Hein w.'v d-d ~ v oi;hI I" i • im. ...'i lies' ... -tod lid!.. ~ tliat dai i'.'. iarmi'i'.- of ni">! -rot means might kir.' th ■ a.'iimal from lhe IF, Vernmeni ai a re a-ou.il'le ligur ■. With ail i:n|i* ■ omen l too-. e‘e it .'ol in I hi -train : i h.ni- i. v "old I ;• r Uiakl ■ to expect within a g".-. years an imn; : o i"i tease in knit erfut proihicl ion. Ad old l.e taken of Farmers' orni-'H i I,'.- I I I'l'l ..lit tile 11.-i . " :il y ; " I ! I ! ili H IM I. !l . 1 1,1 • ie- of -ml: .1 -'. hoi lie. s: L'-.r ' lie. oled lo llv • ai'oi.-e niciil i'.aied v.ouhl do lar more bn' I n.Ill', iieal" good of lot• iudii-lr;. I lam a - h i n ■; h 11 J A \ AT 111. N. At ml oi la t woo . n, the i.u nation | | 1 Im (ioveriinieiil. a CiUiimii Ie • i*, .'present in” I raile pr he dull-'. n ml \ arii us 'o.-iai o.n- oi N w ZiairiaL i .: i: - i. I ‘cil the ijicsl loii of 1 a xa : mu ■gene!-ally and in in a report on ila -idi.ieoi to the I’rimc Mini ter. If Income J'ax alone were paid l\ (ti: rerniin ■ i: i.a 1 and bald a n l hied t ii s on their iieliviti;'.', ti'-' anaaio. v. odd l a astoiii-hiiml.v hire;.'. J he Lo t that

Banks, Companes, and private firms, are so handicapped in competing with these Governmental or Municipal trading concerns is'unjust, and the higher the Income Tax, the greater the injustice. Tt follows as a logical conclusion that with the continued extension of Governmental and Municipal activities the yield from Hu onto Tax must become seroosly affected, consequently cither the tax must remain at a dangerously high level, or money must be raised by ether means. Tt must not be forgotten, in estimating costs that Income Tax is as much taken into account as the wages or rents, and that in the cud it is the public that pays the Tax. Tf all .Municipal and Governmental trading concerns paid income tax. not only would competition he put on a fairer basis, but the burden of the taxation would be plat"d where it rightly belongs. tup. ornooK. In these uncertain timps, it is tliffit "It to say ViTiai the future has in store for our Dominion, since we rely for our prosperity on the prices our primary products realise abroad. \Vc arc thus dependent on conditions entirely outside' our own control. The purchasing power of our principal customer -■Great Britain—means good or had times for this Dominion, and the purchasing power of Groat Britain again depends upon conditions which prevail in other countries. Now Zealand is a land peculiarly fortunate. Tt G a young country, but its very vontli should lie its ehtot asset, t.'vory day it is making its own history, and it>. own traditions: if it remembers the value of i- -operation between the Mass: :, that history should make pleasant reading in the future.