BANK OF NEWZEALAND.

King Country Chronicle, Volume VIII, Issue 678, 17 June 1914, Page 3

BANK OF NEWZEALAND.

ANNUAL GENERAL MEETING. THE CHAIRMAN'S SPEECH. The annual general meeting of the shareholders of the Bank of New Zealand was held at Wellington on Friday. The following extracts from the speech of the chairman of directors, Mr H. Boauchamp, will be read with interest: — Advances. —As the result of the legislation of last Bession of Parliament;, by which the Bank waa empowered to increase it 3 capital by £300,000, one-fourth of which has now been issued, the institution is in a position tu take its full part in providing funds for the further development of the country, and for the requirements of increasing trade and industry. You will observe that bills discounted and other advances, which together total £11.360,485, already show an increase of £603,157 as compared with the figures of a year ago; and, aj satisfactory business offers, a further gradual increase in the total number under the heading of advances may be looked for. Profit and Loss.—After the payment of £40,000 interest on guaranteed stock and ths making of all recessary appropriat'ons, including provision for the Bank's annual grant to the Provident Fund aa well as a bonus to tin staff, and the allocation of £40,000 in reduction of Bank Premises and Furniture accounts, the net profits for the year amount to £308,490, as compared with £302,530 at Marcb 31st, 1913. Adding the amount brought forward from last year, £43,117, and deducting the amount of interim dividend at 6 per cent, paid in December—£6o.ooo— sum available for distribution is £291,608. The directors now propose to pay a further dividend of « per cent, and a bonus of 3 per -cent, on ordinary shares, and a further 4 per cent, on preference shares. The amount "distributed to shareholders for the year will therefore be £125,000. \b I have already stated, it is proposed to transfer £17,000 to the Reserve Fund, and to carry forward the balance £51,608. While on the subjeqt of profit and losb, I may mention that the amount appearing under th<j head of "Rates and Taxes" continues to increase steadily.' Nearly the whole of this outgo is in New Zealand, where our total contribution to taxation, general and local, now exceeds £57,000 per annum, ot nearly £llO per week. In fact, the general tendency for expeneea under all heads is to increase in a great3r ratio than the profits of the Bank but, in this respect, we are * only in the same position as similar institutions. General Remarks.—The London money market underwent a sudden transformation early in the year. The best informed financial writers in London had failed to predict the impending change. In December last there was very little prospect of any ease in the money market, yet by the middle" of January it had become clearly evident that money was in abundant supply. The New South Wales 4 per cent, loan for £3,000,000, issued during the firet week in January at the price of £96, waa a failure, as the underwriters were saddled with 90 per cent, of it, that is to say, the public subscriptions amounted to only 10 per cent. A fortnight later, the Victorian loan of £1,000,000, also at 4 per cent, with a minimum issue price of £97 was subscribed threefold, and formed the first of a succession of loan issues, including one of the New Zaaland Government, which were eagerly subscribed for by investors. Imperial Consols, which during 1913 had dropped to £7l, and which during the first week in January stood at, £7l 15s, a fortnight later had risen to £74_an advance of £2 5s in two weeks. An immediate improvement in colonial Government stocks also took place, and prices, on the whole, have since been well maintained. The upward movement in Consols continued, and on 4th February the quotation was £77 12s 6d. the highest recorded for a long time. The turn of affairs was very acceptable, for gilt-edged securities had suffered very severely during 1913, and the Engilsh banks had to use over two millions of their profits to meet the declension in values. The Bank of England discount rate, which had stood at 5 per cent. Bince the beginning of October, was reduced on January Bth to MJ per cent. On January 2?. nd it was again reduced to 4 per cent., and on January 29th to 3 par cent, at which it now stands. Some authorities hold the opinion that the troubles that have of late been experienced by the bond-holders of some foreign States—Mexico and Brazil—will operate in the direction of enhancing the popularity of British and Oversea Dominion securities, as being, though less remunerative from the point of view of annual yield, decidedly more dependable, as regards security of, both . principal and interest. The inference seems reasonable, and we may perhaps hope to see the stocks and bonds, not only of the Dominion Governments, but also of the municipalities and other local bodies of the British Dominions, presently increasing in public favour. The demand for capital supplies is pouring in from all quarters uf the world, and appears to be quite insatiable! You will appreciate the immensity of the ""rush" when J tell you that the applications dealt with in the London market during the first two months of the current year amounted to nearly 72J millions, being double the amount dealt with during the corresponding periods of each of the three preceding years. Such an enormous turnover must, if continued, sooner or later "exhaust the supplies and lead to an enhancement of money values. It will not be safe, therefore, at present, to count upon a prolonged period of cheap money.

Apropos of our extending market?, I would say that it is to be hoped that shippers will be punctilious as regards the character of the produce sent forward, and that thn Government inspectors and graders will be rigorous in their requirements, so that the New Zealand output may be maintained at a high standard, thus securing a consequent command of a ready and remunerative market. It is in this way alone that a satisfactory and permanent trade can be developed. The importance of this question, from the standpoint of the producer, is very forcibly borne in upon ua when we review the values to which the pastoral and arable lands of the Dominion have now attained. For example: Taking the dairying industry, which was in its infancy in 1894, we find that land in favoured districts, which in 1894 could have been bought at from £5 to £ls per acre, is now selling at from £2O to £75 per acre, an increase of say 400 per cent. The gross yield per acre has, however not increased in a corresponding ratio being only about 130 per cmt. more to dav than it was then. Land hunger and competition are forcing values up to a point which leaves no margin for any material increase in coßt jf production or decrease in sale price of the product and as the cost of production does not aeem likely to diminish, but rather to increase, no effort should be spared to maintain the excellence of the product so that a drop in prices may not occur as a result of deter iqration in quality. The increment in the value of sheep lands has, generally speaking, not been so heavy proportionately as that of dairy land. Roughly, the value of such' land has about doubled during the tweMy years, but the better average prices ruling now, and the impro/ed prospects of the wool inr dustry, quite justify the increase ; and eheepfarmers, working under normal conditions, have earned in recent years a better return on their invested capital than they were obtaining a decade or more ago. Much of the increase is due to actual outlay on improvements —clearing, sowing, fencing, building, etc.— but the major portion i'b Increase brought about by settlement, and the higher yield resulting from improved methods of working and better nrices. Clearly tie values of land—dairying land especially—are adjusting themselves at such a level as leaves no room for the "slipshod" farmer. If the industry is to continue payable.with land at such high values, scientific principles must be followed and the moat approved methods adopted, in order that the very best returns on the labour, and capital employed may be realised.