THE BANK OF NEW SOUTH WALES.

Shannon News, 27 December 1929, Page 3

THE BANK OF NEW SOUTH WALES.

PRESIDENT REVIEWS PAST YEAR

I MANY NEW BRANCHES OPENED. : The annual meeting of shareholders of the Bank of New South Wale 3 was held at the head office in Sydney on November 29th last. NET PROFIT NEARLY A MILLION. The Directors' report stated the net ! profits for the year amounted to £994,824, to which was added the- undivided balance of £168,653 from 1928, making a total of £1,163,478 available.. The Directors recommended payment of *a dividend for three quarters at the rate of 10 per cent, per annum, absorbing £562,500, leaving a balance of £600,978, out of which the Directors recommended payment of the fourth quarter's dividend, £187,500,, augmentation of the Reserve Fund £250,000, and the carrying forward of £163,478 10s 6d. NEW BRANCHES OPENED. During the year branches of the Bank have been opened at Bingara, Bribbaree, Cremorne Junction (Sydney),. Ear.wood (Sydney), Macksvilld, Nabiac, 1 Northbridge "(Sydney), Nundle, Peak Hill, Wauchope, and Woodstock, in New South Wales; Boyup Brook, Claremont, Kondinin, Mingeuew, and Mullewa,, in Western Australia; Charleville, Dirranbandi, Esk, Gatton, Julia Creek, Mount Isa, Roma Street (Bris•bane), Stones Comes (Brisbane), Texas, and Wynnum South, in Queensland; Footscray (Melbourne), West End Branch (Melbourne), and Yarrowonga, in Victoria; Te Awamutu and Wairoa .(Hawke's Bay), in New Zealand; and Salamoa in the Mandated Territory of New Guinea. The agencies at Blackheath, Pennant Hills and Rosevale. (Sydney), in New South Wales, and at Ballidu and Guile ford, in Western Australia, have been converted into branches. The Bank's branches and agencies now number 58S.

THE PRESIDENT'S SPEECH. In moving the adoption of the report and balance sheet, the President, Mr Thomas Buckland, traversed the trend of events in private and public finance in Australia and issued a note of warning which must command serious attention in this Dominion as we'll as in the Commonwealth. He said: — Deposits, £66,056,00, show a small increase of £l, 541,00. This taken with the like experience of other banks is evidence of the slbwing-up of our national progress, and a lower capacity to provide for the development of the many and varied industries of the community. It seems necessary 10 repeat what I said two years ago in this connection. The drain on local funds, as the result of borrowings by Governments and local authorities, appreciably affects the accumulation of deposits. This in turn reduces the funds available for advances, and for that private enterprise upon which our progress and wealth mainly depend., Without a steady and appreciable increase in deposits year by year the banks cannot extend, their support to the development, of the community. The banks cannot create credit except by resorting to inflation with its painful aftermath.

EXTRAVAGANCE CONDEMNED. This leads me to the point I wish particularly to stress. The people as a whole will bring about their own undoing if they pursue the policy of past years with its extravagant and often . unreproductive expenditures. Such policies with their reduction of output—not necessarily the value of output—must bring hard times and force upon us a lower standard of living. When these are combined witii a serious fall in the prices obtainable for our-chief staple, wool, and a considerable reduction in the quantity of another, wheat, due to adverse weather conditions, the outlook is hard indeed. The figures of the balance-sheet give full support to the position thus outlined.

ADVANCES TO CLIENTS INCREASE. Advances have increased by £8,074,000, making a total of £59,427,000. When taken with the comparatively small increase in' deposits this is a striking testimony to the .way in which our customers have found it necessary to lean upon us during the past year, and when it is realised that the experience of the other banks is similar-to ours in this department also it behoves all of us to take stock of our position, both as a community and as individuals. The money for these increased advances has been provided mainly from our liquid assets, Government and other securities, Treasury bills, and cash, which show reductions of £2,074,000, £2,000,000, and £4,090,000 respectively. ' On the other hand money at short call has increased by £1,220,000, and other items show small increases. Last year our holding in cash was on the high side for this time of the year, so that the reduction is not as important as it may appear at first sight. These figures will begin to readjust themselves as the proceeds of our produce come to hand and the community accommodates itself to our altered conditions. This readjustment will, however, tend to be .slower than in past years. The price 3 and quantities of our primary products are so much le3S and the national income so much small-

The capital is the same as last year, £7,500,000, and it is proposed to add £250,000 to the reserve fund, making it £6,150,000. ' TAXATION BURDEN. The President said the Directors felt it prudent, in view of the fall in the prices of their staples during recent years to conserve the Bank's resources

and they would not therefore pay a bonus to shareholders on this occasion He drew attention to the taxation burden. The Bank had paid £350,086 during the year, an increase of £55,741 over the previous year, and representing a charge on capital of £4 13s 4d per cent. After reviewing the conditions in Australia he said: "The seasons in New Zealand have been good and the country is prosperous. The external trade shows a substantial balance in favour of exports, while Australia's balance is the other way. Conditions in Fiji are good, despite lower prices for sugar and copra, as are also those in Papua and the Mandated Territory of New Guinea."

• AUSTRALIAN CONDITIONS. Mr Buckland then referred to the reduction in Australia's exports, due to the drought and fall in values of produce. He pointed out the fallacy of attempting to restore the adverse trade balance either by placing an embargo on imports, or by resorting to artificial 'means of controlling the realisation of their produce. "I do not think," he said, "that any such artificial tampering with the course of marketing will in the end achieve the objects aimed at, but the serious aspect of the case, from our point of view, is that those Avho have sponsored such schemes have apparently overlooked the question of finance. How is it possible for us to carry' over a considerably extended period the product already harvested or shorn, while at tho same time we are called upon to finance the growing harvest or clip? In times when money'is plentiful it might be possible to go a long way towards achieving this object, but in a period when our loads are already heavy it is very doubtful whether our financial resources will enable such schemes to be carried through without denying th..> necessary finance to those in need of i it for the current season's requirements. There is another aspect of this question. It is unsound for the producer to become a speculator in his produce. The President pointed out the dangers of inflating the note issue and agreed with the policy of borrowing within the Commonwealth by Governments and local authorities, but pointed out that it would restrict all development work in Australia to such proportion of the amount of the annual savings of the Australian community as could be attracted to the investment in such loans.

WAR" WASTAGE. Largely owing to the tremendous wastage of accumulated capital during ,the war and the policies pursued morj or less throughout + .he world during and since then, the supplies of available funds fall short of requirementa and the rates of interest are tending to harden throughout the financial world. Owing to this there is no doubt that we shall have to pay more for one requirements in the immediate future. Should a policy of borrowing.internally be persisted in, the funds so obtained must be withdrawn from the funds in use by the community in its trading and industrial activities, both primary and secondary. It is easy to see, therefore, that the employment given on the one hand would increase the unemployment on the other, while the withdrawal of necessary finance wouM tend to weaken or destroy a proportion of industries already' existing, and the income available for taxation for Government purposes would be reduced over the whole community. \ READJUSTMENT NEEDED. Are we as a people incapable of facing the position we find ourselves in? Are we able to keep up artificial rates of wages and working restrictions the while repeated application to the Courst show that real wages, that is, purchasing power, do not follow them ? Is 11. sound to follow the doctrine of high wages for some,, while others cannot find employment at that figure? Is ii not better for all to work on a lowei nominal wage? Could not the readjustment be made by small amounts month ]y spread over an extended period, and so reach a sound and profitable basis with as little injury»to trade and m dustry as possible? It is imperative that we should be able to produce' both in the primary and secondary spheres at a cost enabling us to sell at a profit in competition with the outside world, and, I emphasise, to do so with out artificial aids such as bounties, etc. The serious increase in taxation is another feature of the high cost of production. This burden is accentuated by the uncertainty, from year to year, in the incidence of taxation and in the administration of the various Acts, which is too often unsympathetic and failing in .appreciation of the needs and difficulties of the taxpayers concerned. After adversely criticising a proposal to convert the Commonwealth Bank into a "People's Bank," the President concluded by a appreciation of the work of the staff during the year and a tribute to the late Mr F. B. S. Kalkiner, one of the directors.