Bank of New Zealand

Stratford Evening Post, Volume XXX, Issue 55, 8 June 1916, Page 7

Bank of New Zealand

ANNUAL MEETING OF PROPRIETORS. (Special to “Stratford Post.’ 1 ) Wellington, June 9. The ordinary general meeting of proprietors of the Bank of New Zealand was held at the head office, Wellington, at noon to-day, Mr H. Beauchamp, Chairman of Directors, presiding. In moving the adoption of the report ana balance-sheet, the Chairman pointed out that the 4 per cent, guaranteed stock, which appeared in the previous balance-sheet at £528,988, now stands at £529,988. The only other alteration in the capital is that the new issue of ordinary shares of £500,000 is now fully paid-up, the final instalments of purchase money having been duly paid by shareholders. The reserve fund by the addition of the further sum of £12,141, which falls to be credited to it in respect of premium on new shares, and the transfer from profits of £50,000 which the Board proposes to make, will stand at £2,062,141 —of which amount £1,000,000 is invested in British Government securities. Deposits (£23,556,676) exhibit the very large increase of £4,815,019 as compared with the figures of a year ago.

THE STAFF. I

Referring to the staff, Mr Beauchamp stated that since the outbreak of the war, the Bank has granted leave to 247 of its officers for the purpose of joining the Military Forces. Of this number, 13 have given up their lives on active service, and 28 others have been wounded in action. So far, 16 have received their discharges from the Expeditionary Forces and 12 of these have returned to Rank duty, the remaining four being still unfit’to take up civil employment meantime. In addition, we have lost the services of 36 of our officers who resigned their in order to join the Army. As mentioned last year, the Bank is allowing half-pay to Colonial officers on leave serving with the Military Forces, and full pay to members of the London s,aff, the military pay of the latter being on a lower snale than that of the Colonials. The results of the year’s work have been sufficiently good to justify the Board in again paying the staff a bonus of five per cent, on salaries. In this bonus the members of the staff serving with the Army shared as on the basis of full pay. ABNORMAL CONDITIONS. - Mr Beauchamp also said: As vou are probably aware, the margin between the values of the Dominion s exports and imports for the year, owing to the abnormal conditions which have rul6d, has been unusually large; and this wide disparity is reflected in, and is the cause of the very large increase of our funds in Lonaon. Exports to London have largely increased, whilst imports therefrom have decreased, and the result is— London accumulations. It should bo mentioned that our surplus funds m London are profitably employed principally bv investment in short-dated British Government' securities and are readily available to us when required. T In wt address last year, 1 st<. that full provision had been made tor all depreciation in London investments, on the basis of market values at. 31st March, 1945. The second British war loan, at H per cent, (yielding a returli of about one-half per cent, more than the earlier loan) was issued in June, 1915, and is non quoted at a discount. The rates on short-dated British Government securities have also increased: a yeai aero six months Treasury Bills yielded r, 3 12s 6d per cent, per annum at 31st March last the yield was o cent, per annum. In view of this icrease in the interest return, the market values of all gilt-edged securities have further declined from last yeai ■ values, and considerable » IOV again had to be made by the Bank for depreciation on its investments at 31st March last, . In this respe • however, our experience is onß tn.u of all other financial institutions, including the leading MU banks t£t have funds invested m such sec pities The Bank. I may say, has written" down the whole of its London investments to the market prices tually ruling there on 31st March last. WAR FUNDS CONTRIBUTION. In pursuance of the M at the Half-yearly General Moctj in"- held in December last, £iU,UW was set aside out of the Bank a profits as a contribution to the National Fund'for Wounded Soldiers and their dependents. The amount tas ‘ocente lv been paid over to the Wai i unds Council, and in acknowledging its receipt, the Minister of Internal Altairs wrote to the Bank as follows lam deeply sensible of the practical sympathy which the Bank of New Zealand has thus shown towards our wounded soldiers, and on behalf of the Government and the National War I'uuds Council, I shall be glad if you will accept and convey to your Board of Directors and Shareholders my sincere thanks for their exceedingly liberal contribution With regard to the request that the money be applied to the relief of wounded or permanently incapacitated soldiers and their dependants, this will be duly complied with.” WAR AND FINANCE.

It is again impossible to avoid reference to the titanic conflict now raging, because this War is affecting the trade, commerce, industries, and economic fabric of the world, and the long arm of its influence reaches into almost every corner of the civilised globe. To-day, fifteen States, or countries, are in open war, viz.: Britain, France, Russia, Italy, Belgium, Portugal, Montenegro, Albania, Serbia, Japan, Egypt, Germany, AustriaHungary, Bulgaria, and Turkey. The years of secret preparation by the Central Powers of Europe placed them, at the outset, in a position of superiority, and enabled them to achieve much; but, in the past twelve months, relatively little progress has been made on either side, and is one writer in a British magazine has saui, “nothing has happened in this War exactly as it was thought it would happen.” Both sides have had to learn many new lessons in warfare, in organisation, and in application; and no\y, after nearly two years of hostilities, the end seems still a Inna: wav off. How far weak and vacillating statesmanship has contributed to the prolongation -of hostilities will never be known. It is to be feared, however, that a heavy responsibility rests at its door. It is little short of humiliating to read of the Cabinet crises, which are constantly recurring, over o ic sub-

ject or another. Such bickerings are most unpatriotic, and should be resolutely repressed in this time of the Empire’s danger. Politicians should unite to give effect to the unanimous determination of the Empire to win the War, and concentrate every effort upon it and upon it alone, regardless of faction or the views of any particular section of the community. War spells waste. It involves the destruction of capital and material, and the misuse of energy and power. It is the economic aspect of the War that interests us most, and the ran' tint oi capital that is being dissipated m the present conflict is to be reckoned in thousands of millions. The “Economist.” (London) recently presented a table showing the cost of tiiu War to the European countries, together with the addition to their respective debts, and the interest per annum involved. 'The figures are an estimate to March 31st, 1916, and may be accepted a« approximately correct. They are;—

Britain; Direct cost of the war, £1,550,00(3,000; Addition to National Debt, £1,380,000,000; Interest per annum, £69,000,000. France: £1,655,000,000; £1,900,000,000; £95,000,000. Russia' £1,425,000,000; £1,500.000,000; £75,000,000. Italy: £360.000,000; £-100.000,000; £20,000,000. Belgium; £120,000,000; £120,000,000; £6,000,000. Serbia and Montenegro: £IOO,000,000; £100,000,000; £6,000,000. Entente: Direct cost of the war, £5,210,000,000; Addition to National Debt, £5,400,000,000; Interest per annum, £271,000,000. Germany: Direct cost of the war, £2,100,000,000; Addition to National Debt, £2,100.000,000; Interest per annum, £105,000.000. Austria-Hun-gary: £1.100,000,000; £1,150.000,000; £66.000,000. Turkey; £140.000,000; £150,000,000; £9.000,000. Bulgaria: PSO.OOO.OOO: £30,000,000: £2.000,000. Alliance: Direct cost of the war, £3,370,000,000: Addition to National Debt, £3.430 000.000; Interest per annum, £182,000,000. All belligerents; Direct cost of the war. £8.580,000 000; Addition to National Debt, £8,830.000,000; Interest ner annum, £463,000,000. c In the above figures, no allowance is made for the war debts contracted by the British Overseas Dominions, by Japan and Portugal, or for the expenditure necessitated by the War in the case of neutral countries. Holland. Switzerland. Greece, and Roumania have mobilised their forces and are on a war footing; and their expenses, which they can ill afford, would add a further considerable sum to the total. But the actual cost of the War is not the only financial calamity to he reckoned with. We must take account of the destruction of buildings, railways, and other works of national importance; the reduction in agricultural values, etc.; the considerable loss of production in Northern France. Belgium. East Prussia, Poland, Galicia, and Serbia ; the sinking of ships and their cargoes ; the decrease in stocks of food, metals and other raw materials; the misuse of machinery employed in making munitions ; the depreciation in the prices of securities, and in the values of other assets; the cost of pensions; the loss of human capital, as measured bv the killed and permanently disabled, —all these must be included in the reckoning. Up to the end of last vear, the numbers killed, died from disease, and permanently incapacitated for the ten countries 1 havf> named, are assessed at 3,980,000; and the loss of human capital at £1,585. 000,000. And the war is not over, nor is the end in sight.

With so large a percentage of Allied shipping engaged in war services, with every available factory oporatiny in the production of munitions, ;u:ij with a largo proportion of the ■ tdijii population engaged in war work, I not surprising that British trade, a-s regards exports, has shrunk. The : /' v '-T ro 'of the United Kingdom !n r t past five vears are as follows ■ i" ! ’: rts ; 1911, £380,157.527; 1912, £714, 049,631; 1913, £708,734.799: 1914, £696,635,113; 1915, £ '59 756,279. ■

Exuorts: U.K. Produce: 1911, £454 . 119.298; 1912, £487,223,439; 1913 £525.245.289; 1914, £430,721,357; 1915. £384,647,336. Re-Exports; 1911, £102,759,134; 1912, £111,737,691; 1913, £109.575,037; 1914, £95,474,166; 1915, £98,797,123. Ever since that fateful day in August, 1914, the British Empire has been engaged in making “preparations” for war, and, incidentally, fending off attacks. Huge blunders have been committed, but, on the whole, a wonderful result lias been achieved. Britain has always been a first-class naval Power, and to-day her position as Mistress of the Seas is more firmly established than ever before. She is also now a first-class military Power, with approximately 5,000,000 men under arms fully equipped, fed, clothed and tended as soldiers have never been before. And this is not all; Britain has maintained her foremost rank as a financial Power, as the world’s banker, sea carrier, and insurance underwriter. We may go a step further and say that, while the needs of the moment have thus been met, the future lias not been neglected. British manufacturers have learned most valuable lessons in organisation, in factory management, and in co-ordination of effort. They have grown to recognise the supreme value of machinery, and they have also discovered that the British Board of Trade has become a “live” institution, and can be utilised to much advantage by the captains of industry ! and commerce. The Nation that ha'accomplished so much in so short a , time, has surely a great future before ; it. Britain is to-day better known, 'and more highly appreciated and res--1 pected by the Nations of the world, than ever she was before the war. j She is applauded for being faithful to | her friends, true to her word, genjerous and fair to her foes, scrupulously honest in her business dealings, and actuated in all things, by a profound desire to live in peace and amity with all the world. WAR PROSPERITY. With the enormous expenditure on war goods and war services, it is not surprising that there is considerable trade activity and much prosperity the world over. Even in Britain the working classes are fully employed and are receiving extraordinarily high wages, and, if reports speak trnlv, the laboring people of the other belligerent States are in a similarly thriving condition.; New Zealand has shared" to an abnormal extent, in what may be termed “war prosperity.” There has been an exceptional demand for our wool, meat, ard dairy produce, and prices have reached a particularly high level. To realise to what extent we have profited by the war, it is nulv necessary to give the export and import figures of the Dominion for the last few years. The

figures for the respective years, ended \i-nvb 3.lst. are:—

LOOKING TO THE FUTURE. The gains and losses of the war to New Zealand are obvious. High prices for produce have brought us considerable wealth, which, probably, would have been much greater had we commanded fuller shipping facilities. On the other hand, the departure from the country of so large a number of the flower of our manhood, is, while an absolute necessity, causing a serious disturbance in the economic and industrial life of the community. Looking to the future, we may sateiy conclude that the world which will emerge from the war will be a very different world from that which entered it. Permutations and changes of a fur reaching character may be expected to take place. So far as tlie Dominion is concerned, we snail be faced, at the close of the war, witn two questions—both vital to our interests. New Zealand is a producing country and by necessity, _ a borrowing one, and the state of tne produce markets, and of the money market, will have considerable bearing on our future prosperity and development. The present war is on such an enormous and unexampled scale that we have no reliable precedents to guide us in forecasting post-war conditions, and, as far as the produce markets are concerned, it is particularly difficult to make assertions with confidence. Europe will certainly be compelled to economise—Great Britain quite as much as the other belligerents. Now, assuming the present consumers of our products will be forced to economise, it is obvious that they will be unable to pay high prices for the foodstuffs we send them. The values of all cur products, therefore, must naturally be expected to fall, and to fall perhaps rather heavily, from those current to-day. Tne measure of that fall is, however, the uncertain feature, being dependent on the markets which will be open to us and to a variety of other circumstances. . ...„, Fortunately, this country is differently situated to many others, in that the products of the soil—to which it looks for its support and wealui —are increasing in a much .greater ratio than its population, whereas, in the Northern Hemisphere, the contrary is the case, it seems, theretore, that should we he faced wicii any set-back after the termination of hostilities, it will be but of a temporary character, an we may therefore look hopefully to the future. As regards the prospects of the money market, there are grounds foi speaking with more bo much capital will be wanted in Ituiopo that there will be very little to spare for other countries; certainly there will be no chance of obtaining money at pre-war rates. Even if we should be prepared to borrow at the then ruling rates, the British Government might find it, necessary to continue the present restrictions on capital issues. . . , , There are disquieting features in the p • able post-war conditions, and for t reason it is of the imports e that the people of New Zeal ..r.d. Idle they have the opportunity, should' recognise the true value «• i .onomy. The more Wff save, the bet - .er wo shall be able to assist the Empire now and to face the unfavorable conditions that must, I fear, movitab-

; - follow the declaration of peace. • ti-- is obviov£.!v, the only prudent course to adopt,‘ard the need therefore, for economy cannot .< be too strongly urged upon every class of tno community. , The Chairman then formally moved • t lie adopt 5 of he report and bal-ance-sheet. .■ T , ’ Mr Wiluam Watson said; I nave pleasure in seconding the motion tor the adoption of the report and nuance sheet, and congratulate the ishareholders on their receiving the usual dividend notwithstanding, the , largo expense incidental to the war, j the rai es and taxes alone having amov 1 to £137,096, as against j £74 gy; > the previous year. It is possible that, without full oxplana- j tion, some shareholders may imagine i that the profits amounting to £357,- j 093, when compared with £396,166 in j the previous year, indicate a lulling i off in the earning power of the Bank, ; and I therefore take, this opportunity to assure shareholders that the ordinary earning power has increased in quite a satisfactory measure. , Ihe shortage in the profits shown is duo to the provision for depreciation in investment securities mentioned by the chairman in his speech; indeed the provision was much more than the shortage, but this must not he taken to mean an ultimate loss, for the interest receivable on the securities remains the satne, as if no depreciation had occurred, and values will doubtless recover after the war. I may quote the following appropriations for the same purpose made by leading banks in Great Britain and Ireland in or for the year 1915 ; — 1 Barclay and Co., Ld., £750,000; London City and Midland Bank, Ld., £642,860; London County and Westminster Bank, Ld., £472,412; Lloyds Bank, Ld., £410,000; Bank of Ireland, £390,000; Bank of Scotland, £270,000. Next March/, the period for winch I was elected one of your representatives on the Board will expire, and I shall again offer myself for re-election at the December meeting. On that occasion I trust I shall receive another mark of the confidence which the shareholders have hitherto 4 eposed in me.

Imports. Exports. Exports. £. £. £. 1910 21,308,431 33,468,391 12.159,960 191519,805,057 27,465,803 7,660,746 1914 21,835,154 23,438,428 1,603,274 1913 21,309,688 22,643,265 1,333,577