BANK OF N.Z.

Hokitika Guardian, 23 June 1933, Page 7

BANK OF N.Z.

(ANNUAL MEETING. WELLINGTON, Juno 23. •The annual meeting ; of the Lank, of •. Zealand was held to-day. The .chairman said that-the balance sheet with report of the directors for the^ year ended . 31st March ’ may >be filjonfas read. ...... , . , Before moying the adoption, of. the report ; and ibalaijce isheet, 1 will refer, briefly to the principal itcm s in the. balance sheet. /'Capital and. Reserve Fund.—These items'.remain the same as last year. ’ Notes in .Circulation.—An increase of , £275,985- is shown, due , to an exceptional transaction on the balance day. .-The- weekly average, of -the cir-y •culation for the year was £3,650,438. Deposits.—These have increased by £1,00?,396j the greater portion being in ' fixed deposits. Government balances are loss by £386,950. j

The expansion in deposits by the •public may He attributed to the lack of satisfactory openings . for safe and profitable investment. ' Bills payable and other liabilities

show ia reduction of £113,370. Sales of exchange on London have, to a much greater extent than usual, been by way of telegraphic transfer instead of by draft.

JspP-rofij. end Lose. —Although an increase of £7,24-7 is shown, thi s is not due to our ordinary bunking operations, but to advantageous realisations of some of our over, 3a?,s - investments and certai n other items of an; ‘exceptional and nonrecurring nature. ’ The of our ordinary operations showed a reduction on the past two years, a-s might be expected.

O'oin, Cash Balances and Deposits with Bankers.—There is an Increase of £607,437 in this item.

Money at call and short notice, Government securities and other securities in London have increased by £1,952,080.

New Zealand Government securities .'held in the Dominion' and' Australia are down £1,228,540, due chiefly to reduced holding of Treasury Bills.

Australian Government securities show ap increase of £327,012, represented by short-dated securities which we deemed it desirable to take .up owing to the difficulty of transferring accumulating funds to New Zealand, Municipal and other local bodies’ securities show a reduction of £161,897

due to maturities and s ales. You will observe that the more readjly realisable assets total £25,712,571, indicating that we are maintaining an exceptionally strong position, which world conditions at the present time make imperative.

I may add that our holdings of Government and municipal securities stand in our books well under market value.

Advances and bills discounted show a reduction of £573,452. Ordinary advances are less by £2,274,798, but an advance of £1,575,000 has been' made to the New Zealand Government against its discharged soldiers’ settlement mortgages. iSome minor items make up the difference. No really safe and desirable advance business has been refused, but there has been lack of demand for advances of that nature.

•Rates and Taxes.—Falling profits have not been followed by a commensurate reduction rates and taxes. Income Tax. —Some relief is now to be afforded the banks in respect of New Zealand income tax, inasmuch ,ah in the assessment of taxable income they are to be permitted to deduct the aaiount of the bad debts sustained during the year. This concession i s still a long way from the advantage to be

gained were the banks taxed as ordinary joint stock companies. Dividend.—The dividend on all of shares will be payable in Wellington to-morrow, and at our various branches on receipt of advice.

Interest -Rates.—The rate for twoyear fixed deposits wa s reduced by. } per cent, on Ist June, 1932 and a further reduction of £ per cent. • was made on 2nd December last. A./- 1 ' Directors.—The term of office of 'Mr William Watson, who hag been one of your. representatives now for nearly 40 years,- expired in March last, and- he was -re-elected unopposed to the position.

Tlv term of office as your'representative will expire in March next,. when I hope to again merit your confidence.

The term of office of Sir Harold Beauchamp and Mr Oliver Nicholson expired in March last, and - .both have been re-appointed ,< by the Government.

Staff.:—We have on our staff list at the present time 1,548 officers. As y®u know, I have always-held .-a, .very, high opinion of our men, whom as a body, it (would; be difficult bo surpass." They are well paid, and, I think contented.

World Conditions Possibly at ®o time in the history of the world have more serious problemsconfronted it than during the past year.

Monetary System.—The calamitous fall in commodity! prices throughout the world, though undoubtedly due to a combination of .many causes, is generally admitted to have been brought about in part by the failure o-f the gold standard system to function in recent' years in tire fairly satisfactory and almost automatic manner which characterised it in pre-war days. The monetary system has been blamed for much of the trouble in the •vtorld, but ‘would any (other system have 6 tood the strain pieced upon with greater efficiency? The system bus failed' in s o far os ft has beefi called upon to do the .impossible. World Economic Conference—The civilised world, disappointed with the meagre results of other conferences and conventions which have been held, as a- last hope are looking anxiously to the outcome of the World Economic Conference now- sitting in London, where matters of vital importance to all the nationg are under discussion. Central Reserve Bank.—As was anticipated, a Bill was introduced into Parliament for the establishment o.f a Central Reserve Bank in New Zealand. It .passed its first reading, but was not further proceeded with, which an the present state of the Dominion’s finances was a wise course to follow. As, however the Bill may again be heard of, a short reference to it may &t be amiss. In the first place, has thg desirability, the necessity or even the advantages of such an institution for New Zealand ever been demonstrated ? Has not the action proposed been at the dictation of London financiers who have little or no knowledge.of the Dominion’s special needs ? Is it reasonable to require the trading .banks to hand over to another proprietary ba,nk 7 per cent, of their he maud deposits and 3 per cent, of their fixed deposits, to be at the disposal of a board of directors, the majority at whom would have no banking training nor be likely to possess any special financial .experience? It is time the Governor and Deputy-C o vemo r who . world constitute the executive of the bank would be appointed by the Gov-ernor-i'n-Oouncil and possibly in consultation with the Bank of (England, but would this ensure the selection of men thoroughly: conversant with New Zealand’s financial requirements? Again I repeat, thi s is no time for trying financial-.experiments which elsewhere have signally failed on their oVecitive ; or, os it' was .forcibly expressed by the British Chancellor o-i the Exchequer! at Ottawa, “Th : s is no time 1 for rash in monetary matters.” ' ' .

Exchange Rate.—ln January last, after lengthy ' negotiations with the Government, the 'Associated Banks consented to -raise the irate of exchange on London from 10 per cent, to 25 per cent, a condition-' 'being that legislation -would be 1 put through indemnifying the banks against any loss, due to a change in the rate which the bonks still could ’ not' advocate!" thus -throwing the entire responsibility on the Government. Dealing wi% other; Dominion matters—the most important legislation enacted was that devised to convert New Zeai'and’s internal debt, both Government' and municipal, embme’ng no less a sum than 5158.000.000, made up of public £115,000,000. and the debt of municipal bodies amounting to £13,000,000. The conversion s cheme comprised bonds maturing at varying future dates and bearing interest at rates up to 6 per cent., with a penalty attached for dissentients, in this respect it differed widely from the British conversion referred to elsewhere, which was entirely

voluntary. The conversion has proved a success, with an estimated s aving in interest to the Exchequer of £570,000

per annum. Another important enactment bearing on the country’s finance has bee, n the Invocation of a 5 per cent., sales tax. During the year an Economic Commission was set up, anid after manv weeks’ careful study of the economic situation in New Zealand, made known their findings, which were considered by some to be somewhat drastic. Their conclusions on the need for reducing Parliamentary and municipal representation are, I thnik, endorsed by most. The overlapping of the various Local Body and Municipal Boards, numbering 699, has for a long time been a matter of adverse comment, and the sooner these and the other important recommendations made by the Commission receive serious attention, the better will it he for the community at large. The price level of our primary products, in common with the products or most of the world, has made a further disastrous slide during the the year. Dairy Produce.—Butter,, after touching the low figure of 65/-, has recently recovered to 75/- —80/-, with the prospects of a restricted output being imposed. Cheese has also responded to some extent.

Wool. —Though it is always dangerous to prophesy, it would appear thas the market has about touched bottom, and a more healthy position has slowly developed since last year. Frozen Meat.—The Meat market still remains depressed. , Tobacco.—The production of tobacco of recent years has made marked progress. The bulk of it is produced in the Nelson district, where the small holdings producing tobacco, hops, small fruits, and orchard products, place this part of the Dominion in the enviable position of feeling the depression less than miv other. Sir George Elliott, in seconding the motion, said :—After the comprehensive survey of the business of the Bank that we have listened to, there seems little need for me to speak of ordinary hanking business. T shall therefore confine myself to a verv few remarks, chiefly concerned with that, outstandingly important subject-, “balance of trade. ”

In 1931, New Zealand purchased goods to the value of £11,731,109 from the United Kingdom, and sold goods to the value of £37,775,155 to the United Kingdom. The return 1 have just read shows that, with the exception of Denmark, Gzecho-Slovagia, United States of America, Soviet Union, and Argentina, New Zealand buys a lower percentage of . goods from the United Kingdom, compared with the goods she sells to the United Kingdom, than any other nation on the list. To have any tangible claim for Customs preferences for our products on the British market, our imports from that market must be increased even if so doing entails a drastic curtailment of our trade with other portions of the Empire that buy less from us than we from them. New Zealand is entirely. dependent on the goodwill of Great Britain. Our products are barred from every other market of any consequence by prohibitive Customs tariffs, or by our geographical position, and yet, including £8,000,000 interest on loans, which in a sense is an import, we only buy about half our imports from the United Kingdom, which buys practically the whole of our exports.

The Commission recently appointed to report on the question of Customs duties generally will no doubt take the whole matter into serious considerafion. One thing, I think, can be looked upon as cevtain, and that is, until a complete coneellation of War Debts and Reparations is definitely agreed upon, no lasting recovery in world trade can take place. It is not much consolation for us in New Zealand to know that we are in the same plight as the rest of ,the world, that others are exnerieneinp the aftermath of lavish borrowing and prodigal spending. Unwittingly, wo and they :

have sown the wind and are now reap* ing the whirlwind. -; Until in the cycle of events good times come again, let us follow the high road of old-established methods, never forgetting the value of hard work and of living within our means. I take pleasure now in seconding the;resolution proposed by'the Chairman that the Directors’ report and balance sheet -be adopted. • y