WAR, FINANCE, AND INDUSTRY.

Pukekohe & Waiuku Times, Volume 6, Issue 290, 6 July 1917, Page 2 (Supplement)

WAR, FINANCE, AND INDUSTRY.

THROUGH THE EYES OF THE BANK OF NEW ZEAiLAND. AN INTERESTING AND INSTRUCTIVE REVIEW. Mr. H. Beauchamp, Chairman of Directors, of the Bank of New Zealand, in moving thi, adoption of the report and balance-sheet, on the occasion ot the annual Meting of Shareholders gave an interesting and exhaustive review of the year's operations. After refering with pleasure to the fact that the Bank had had a very satisfactory vear, Mr Beauchamp went on t0 say-.—Sonie of the principal items in the Balance Sheet exhibit considerable fluctuation compared with the 'figures of twelve months ago, and, In accordance with our usual custom, t will now briefly iefer to these. Capital.—There is no change in the Capital of the Bank. The Reserve Fund, after the addition of £72,858 12s 9d which the Board proposes to make from year's profits, will stand at £2,135,t)00. With the sum proposed to bo carried forward, namely, £111,59->. the Reserve Fund and undivided profits will amount to £2,246,595. Notes in Circulation— (£2,560,325). To meet the currency requirements of the public and the military forces, a considerable expansion of our note circulation has taken place, the increase for the year being £697r>o2. An emergency issue of ten shilling notes was made by the Bank in August last to take the place of lialf-sovereigns, supplies of which could not be obtained. The issue lias been of great service to the public, but the quality of the paper and the style of the note are not altogether satisfactory, and we hope shortly to be able to replace the issue with a nc'.e of a more suitable description. , . , Deposits, (£29,052.790). which include free, fixed and Government deposits, exhibit an increase of £5,496,114 on the previous year's figures. Bills Payable and other Liabilities, now stand at £2,007.968, an increase of £240,559 on the figures at 31st March, 1916. Coin, Bullion. Money at Short Call, & c —Coin and Cash balances are more by £421,357, and now stand at £',914,979. Bullion (119,562) is more bv £38,909, and Government Notes (£159,331) are less by £24,222, as compared with the figures of a year ago. Notes of Other Banks (Legal Tender) —£451,735 —is a new item representing the Bank's holding of other Bank notes at 31st March in connection with settlement of exchanges.

The increase in our cash reserves is a natural movement in view of larger deposit liabilities and our increased note circulation. Money at Call and Short Notice, Government securities and other securities in London, rtand at £11,476,002 —an increase of £2,746,027 for the year. The funds received by the Bank in London in connection with the sale of the Dominion's produce have been in excess of the amounts required for the financing of imports to New 'Zealand and to meet drawings from this end, and, moreover, owing to prompt payment by the Imperial Government under the commandeering scheme, have come to account in London much earlier than under ordinary circumstances would have been the case. I may repeat what I said last year, that our surplus funds in London ar<? profitably employed, principally by investment in short-dated British Government securities, and are readily available to us when required.

The totals under this heading, together with the am o unt of bills receivable and investments in the Dominion, are, I may mention, equal to 65.68 per cent, (or 13s Id in the £) of the total liabilities of the Bank to tli3 public. DEPRECIATION IN INVESTMENTS. Full provision has been made for depreciation in London investments, which r.ave, been written down to their market value at 31st .March last. Rills Receivable, in London and in transit. (£672,147), exhibit a reduction of £2,907,928 on the figures of twelve months ago. The main products of the Dominion have he en purchased by the New Zea lani! Government on behalf of t.io lni|.trial Authorities. No I ills were Ctpmv in connection with this prcc'ucr.— hence the reduction in the amount of our Bills Receivable. Investments in the Dominion stand at £3.289,111, an increase of £I,9?V 911. due to the taking of £2,000,000 of the Dominion's 1916 War Loan.

Advances.—Bills Discounted (£l,256.721) show an increase of £97,0S. r ., and Other Advances (£14,489,763) an increase of —3,804,634, as compare'! with the figures of twelve months ago. The large increase in advances is partly caused by the temporary assistance which we have given to Meat Companies and others in connection with produce commandeered by the Imperial Government, but not yet paid for, and partly by the generally increased demand fcr extended accomodation consequent upon existing trade conditions. The restriction of shipping owing to the submarine menace has delayed the shipment of produce to a very considerable extent: but as our foodstuffs are needed in Great Britain, we may look for every effort being made to supply additional shipping with as little delay as posible. .Meantime, ponding shipment o° the produce and payment therefor by the Imperial Government, we are supporting the Dominion's industries, in the emergency that has arisen, to the fullest extent consistent with safety. Landed Property, Promises, &c. inter the appropriation of £50,00') made from profits, stand at C 4 50.512 as compared with £44 I.Mil', at 31st March, 1916. Profit and Loss. -The net profits for the year, after paying for interest on Guaranteed Stock and making all necessary appropriations, including provision for the Bank's annual grant to the Provident Fund (in addition to a special donation of £2.",000 to the Fund) as well as a bon'...to the Staff, and the allocation of £.10,000 in reduction of Bank Premises and Furniture Account-, amount to £30.",, ISO, as compared wp'i £28.1,X00 at March ;• 1, mi,;. Thi.-: improved result is largely duo to the much smaller appropriation required this year for depreciation of our investments in London. Adding the amount brought forward from la-l year (£.16,464), and deducting the amount of interim dividend at 6 per cent, paid in December (£10.1,000), the sum available for distribution is £316.9,14. The Directors now pro-

pose to pay a further dividend of G per cent, and bonus of 3 per cent, on Ordinary and "B" Preference Shares (making 10 per cent, for the year). The distribution to Shareholders will therefore amount to £237,500 for the year. Of the balance remaining, it is proposed to transfer £72,858 to the Reserve Fund, and to carry forward £111,595. The amount to be carried forward, you will observe, is considerably larger than usual. In view of the uncertainties regarding taxation, the Board considered it advisable to retain a substantial portion of the year's profits in this form. I may mention that "Rates aid Taxes'' for the year under review amounted to £198.051, an increase of £60,955 as compared with the previous year--mainly due to note tax on our larger circulation, and to increased income BOARD OF DIRECTORS. Mr. J. 11. Upton and myself wero the retiring Government n o minees at 31st March last, and we have been re-appointed for another term. Mr. R. W. Kane was the only candidate for the vacancy in the shareholders' representation occasioned by the death of Mr. Martin Kennedy, and I have now pleasure in declaring him duly elected. LONDON BOARD. The constitution of the London Board remains the same, and the responsibilities evolving upon it are no less onerous now than they were at the opening of the war. STAFF. Our male staff is being more and inoro depleted by the withdrawal of men for military service, the number of our officers at present on leave for that purpose being 348. To compensate as far as possible for the shortage of our men, we have continued the engagement of women clerks, wherever suitable, and at the present time have 278 in the Bank's service. Most of them are proving quite capable in the performance of the work entrusted to them.

To the whole staff, men and women, our thanks are due for loyal service rendered under the trying conditions which have prevailed throughout tho year.

I mentioned when last addressing you that the Board had decided to pay a \\ ar bonus of 10 per cent on salaries of married men and single men with dopendents, drawing not more than £SOO a year, to assist in meeting the increased cost of living. It has now been decided to continue this bonus for another year.

As the profits of the Bank at 31>t March last warranted it. the Board paid a cash bonus of 5 per cent, on salaries to the officers who had been drawing the. monthly war bonus of 10 per cent. ; we also paid a bonus of 10 per cent, on salaries to all officers (including women clerks and men on active service) who had not been drawing the 10 per cent, war bonus. The bonuses thus paid to tne working staff—men and women—have totalled for the year £26,264, and to the men on military service, £4.072. In addition to this the annual salary revision lias been made for both the working staff an! those on military service. This revision involves increases in salaries a. mounting to over £20,000The Board have also taken into consideration the financial position of tne Bank's Provident Fund for aged and disabled officers, and, for the purpose of strengthening it to meet prospective burdens that it may have to bear, have donated £25,000 to the Fund, in addition to the annual contribution. I think, therefore, that it will be admitted by even our most captious critic that we have not, during these trying times, been unmindful of the interests of our staff. I am sure jou will wholeheartedly approve of what we have done iu recognition of the merits of the hardworking and deserving body of men and women which constitute our staff.

EXPORTS AND IMPORTS. Tho prosperity in the Dominion, to which I-referred a year ago, continues, and is fully reflected in tho abnormal excess of exports over imports. Taking tho produce year, which ends on September 30th, the experts and imports (exclusive of specie) for tho past five years show the following movements : Year Ended,

In the past two produce years the excess of exports over the imports has exceeded £21,000,000, or approximately 1:21 per head. In addition to this source of revenue, wo have tin exceptional expenditure of the Government for war purpose's. The cost oi the war to New Zealand is stated to be about a million sterling per month, and a substantia" portion of this i, spent within the Dominion. Hence Wo find tha'; every one is more or le.-,s prosperous, and the working (lasses Pave nothing to complain of in thi.- iespect, for they are receiving full war wages. It is Instructive to examine the Dominion's trade figures from another point" and for this purpos.. I take the exports and import- (exclusive of specie in l>oth cases) for each of the pa.-i five calend ir v, ars. The figure- are : Calendar Vear Exports.

ports for 1916 is less by about £2,500, 000 than the excess shown in the previous year This is due to the very large increase in the imports, and to the only moderate expansion of the exports. Since the turn of the year, the exports show a substantial decrease. The figures for the March quarters amply demonstrate this, viz. : March Quarter. Exports. £ 1916 13,242,584 1917 10,495,737 Imports. £ 1916 5,637,456 1917 6,017,771 Excess of Exports. £ 1910 7,605,128 1917 4,477,966 The exports exliipit a shrinkage of £2,746,347, while the imports show an increase of only £380,315. The decline in the experts is probably wholly attributable to transport difficulties. The produce is availably for shipment, and the Dominion could, I have no doubt, furnish full cargoes for forty ocean carriers at the present moment, if the vessels were available IMPERIAL PURCHASES. Not only have high prices been ruling for produce, but our farmers have escaped all marketing worries, for the Imperial Government has commandeered most of our produce and has paid full prices for all taken. It is interesting, for purposes of record, to state tiie volume of the transactions in this respect. From the commencement of the commandeer, up to Saturday, the 2njl June, 11)17, the Imperial Supplies Department in New Zealand had paid to producers the huge sum of £32,621,. 599 made up as follows: £ Frozen Meat (from March 3. 1915) 17,006,328 Cheese (from Nov. 4, 1915) 3,522,086 Wool (from Dec. 1. 1916)... 10,807,949 Scheelite (from Sept. 20, 1915) 74,478 Sheepskins (from Feb. 5, 1917) 139,608 Hides (from Mar. 19, 1917) 118,193 Slipe Wool (from March 31, 1917) 817,191 Other items 136,303 £32,621,59'.) Besides the products actually mentioned, the Imperial Government has control of the markets for butter, hemp, tallow, wheat, sugar, metals, etc.; indeed, it may be safely said that practically all commercial products are now under control. GROWTH OF DEPOSITS.

The financial positon within the Dominion is a strong and improving one. A comparison of the Bank deposits for the March quarter, with those for the corresponding quarter of 1916 (including Government deposits) shows en aggregate increase of £5,583,667. The greatest increase is in Government deposits, due no doubt to the incoming of local loan moneys and to the ingatli. ciing of tho war taxes imposed under the Finance Act. 1916. The growth in the fixed and free deposits is over three millions sterling. Tho increases of free and fixed deposits during the past three years have been exceptionally large. The increase shown in 1915 over 1914 was £2,793,989; the increase in 1916 over the prj-war year jumped to £7,243,&03; and in 1917 to £10,326,290. The total of £34,356,510 is the largest volume of deposits ever before held by the New Zealand banks. Tho Post Office Savings Bank figures also show an expansion. There is unquestionably a great deal of loanable credit in the Dominion, and in view of the probable early issue of another New Zealand War Loan, tho financial positioi. as revealed by the banking returns, is veryencouraging.

THE PENDING WAR LOAN. The Acting-Minister of Finance has already warned the country that the Government will issue another war loan a.s soon as the necessary authority is obtained from Parliament. Having regard to the heavy strain on the financial resources of the Mother Country, it seems to me to he only right that we should endeavour, within the limits of our resources, to finance our own war expenditure. The objects of the loan must appeal to the patriotism of everv section of the community. Much of the money raised will he disbursed in the Dominion, and a substantial portion will go towards the support of soldiers' relatives living here among us. We must, therefore as loyal subjects of the Empire, and as good citizens of New Zealand, be in favour of the loan, and accord it our sympathy and support. The. financial position of the country, to which I have just referred, is such* that there can he no doubt of our ability to provide what is necessary. AGRICULTURAL OUTLOOK. Tho shortage of labour is likely to bo keenly felt during next, harvest, unless the available man-power—and also the woman-power—of the country are organised. It is imperative that tho country should produce more foodstuffs, and if all the available land is put into cultivation (including cottage i gardens) we should have more than sufficient to meet our requirements. It is particularly essential that we should i grow more, cereals, as the piesent war ' has emphasised the importance of every ! country being, a.s far as practicable, I self-supporting as regards food sup- ! idies. Efforts are being made to overcome the shortage of breadstuffs and I farmers are being encouraged to substantially increase their wheat acreages, under a price guarantee which j should leave the growers with a rcai tunable profit, allowing for tne increas. i cd cost of production. Farmers in New i Zealand have always exhibited a prai-o- ---' worthy patriotic spirit, and 1 have no doubt'tlu appeal of the Government to produce more cereals wiil meet with a hearty re.spon.se, particularly as cereals are foodstuffs winch suffer least of a:l i ley prolonged holding.

LONDON .V.OXKY MAHKKT. Following upon the successful issue of tho British War Loan ciiiiii' it temporary "slump" in tne value of Loudon money. The Hank ut Kneiand reduced its rate to •"> per cent., and London discount house.-, to li per tent. '1 lie rate for day-to-day money It'll as low as '-'J p< r Vint. ; lending rates dropped till round, and prices of investment Mocks advanced m sympathy. 'lhis was due to the fact that the loan suhHTiptio'H placed the Bribsh Covernlui'iit in a position to redeem all maturing Treasury hills, and thus a lar»e amount of money m< thrown upon the market seeking investment. -Many ~1 lho British hanks had borrowed heavily from the Bank of Kne.land to put them. m Ives in a position to finance their customer.-,' suhscriptions to tile War Lean ; ml as these advances by tin Bank of En-land were fixed for a term. they could not be immediately repaid.

It is, however, not to be expected tliat this position will last long, although there i 3 no reason to anticipate a return to really dear London money m tho near future. WAR FINANCE. The advent of America into the war zone will appreciably ease the financial strain on Britain, tor it is the intention of President Wilson to assist tho Allies financially, and already England, Franco and Italy have been handed substantial cheques and Russia is also receiving help. The huge " Victory Loan issued by the British Government, and which, as I have already said, was a remarkable success, was insufficient to meet requirements and limited issues of Treasury bills (bv tender), having currencies up to twelve months, were resumed late in March. The issue ot 5 per cent. Exchequer bonds repayable April Ist, 1922. or on October Ist, 1919, if desired by the holder, was also begun early in April and still contmucs. THE SCOURGE OF WAR.

Since 1 addressed you Inst year. the number of belligerents in thu K~at world-war has increased rorti.natol . the accessions have all been to the side of the Allies. The tinted States o America is the principal recruit and the most recent are the Bcupbhes ot Honduras and Nicaragua, lhp Central Powers are still fighting with vigour and their resources in men and munitions do not appear to be yet approaching the point ol exhaustion, hut he economic situation is to them no doubt intolerable, and the shortage ot food must bo serious. Nevertheless, their fighting spirit shows little or no decline. An early termination is very desirable from a New Zealand standpoint for, if it be prolonged, it must have very serious economic effects n the Dominion. We have very nearly exhausted the number of men of military ago in the First Division, and must soon be calling upon those in the Second Division. When tins happens, there is bound to he a serious dislocation of the labour market and many industries must bo affected. It is imperative that we should face this matter squarely, and not content ourselves with mere'hopes or valueless opinions. The British Empire is determined upon victory and we must do our sharo towards that end. whatever sacrifices may be involved. The one great ray of hope in the troubled prospect is the help that the United States of America is able and willing to give. The Americans have been slow to move, but now that they have begun, their efforts are increasing in momentum, and the Allies are assured of the fullest support that America can afford. There can be. and thero must be, no premature peace. Such a peace would be dearly bought. It would bo but an armed truce, with no relief from militarism—the spectre which has haunted European civilisation for the past forty years. When the Aemrican Republic, now our close Ally in this war. was itself in the throes of that terrible conflict between its Northern and Southern States, which ended in the emancipation of the negro and the abolition of slavery, the then President of the Republic, the great Abraham Lincoln, urged upon the Nor. them States the continuance of the struggle for right in the following memorable words: — "Fondly do wo hope, fervently do wc pray, that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue until all the wealth piled by the bondsman's two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall bo paid by another drawn by the sword, as was said three thousand years ago, so still it must be said that 'The judgments of the Lord are true and righteous altogether.' With malice towards none, with charity for all, with firmness in the right as God gives us to see the right, let us finish the work we are in, to bind up the nation's wounds, to care for him who shall have borne the battle, and for his widow and his orphans, to do all which may achieve and cherish a just and a lasting peace among ourselves and with all nations. This exhortation I repeat to-day, because it is equally applicable to the con flict in which the great nation to which it was first addressed has now made common cause with us. for this is a fight for freedom—a fight for the emancipation not of a section of the human race but of the whole, human race, from the wretched thraldom of military despotism." . The motion for the adoption ol the report was seconded by Mr. R. >V. Kane, and earned unanimously.

Sept. 30. Exports. £ 1911-12 .. . . .. 20,714,595 1912•13 .. . . .. 23,682,416 1913--14 .. . . .. 23,759,347 1914-15 .. , ,. .. 29,710,431 1915•16 .. . . .. 34,926,541 Imports. £ 1911--12 .. . . .. 19,615,291 1912--13 . . . . . . 22,868,354 1913 -14 . . . . . .. 21,Q56,3S4 1914 1915--15 .. . -16 .. . . . .. 19,786,221 , . .. 23,791,152 Excess of Exports. £ 1911 1-12 .. .. .. 1,099,304 1911 .'-13 .. .. .. 814,062 191 3 1914--14 .. , -15 . . . , . .. 2,702,963 . .. 9,924,210 1 91 5 -16 .. . , . .. 11.135,389

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