BANK OF NEW ZEALAND.

Taranaki Daily News, Volume LIII, Issue 59, 18 June 1910, Page 7

BANK OF NEW ZEALAND.

ANNUAL MEETING. AN INTERESTING STATEMENT. By Telegraph—Own Correspondent. Wellington, Yesterday. At the annual meeting of the shareholders of t'he Bank of New Zealand, Mt. Watson, in seconding the motion for the adoption of the report and balance sheet, said that speaking tor himself he expected the ordinary shareholders would next year receive a 2% per cent, better return on their shares than they did now, and the expectation was not witlhout tangible foundation. By a. long course of retaining profits, the position of the bank had been so strong that shareholders were now entitled to expect what, after all, would only be 3 per cent, on the £l6 13s 4d which each share had cost, and which cost uad been used to benefit in one way ox another the people of this country. He agreed with the remarks of the chairman as to the lack of confidence in the country.

Mr. Kennedy questioned the chairman's statement on the latter question, and said that instead of there being lack of confidence there was every confidence in the country. ■ The m< tion for the adoption of the report was carried. The report was as follows: At the a:mual meeting- of the Bank of New Zealand, the- chairman, Mr. tf. Beauchamp, in moving the adoption of the report and balance-sheet, said: — Once again it is my pleasant duty to place before shareholders a report which, though showing profits to be dealt with somewhat lower in the aggregate than those of recent years, cannot tout be regarded as very gratifying, and a 'balancesheet which carries on its face the evidence of a satisfactory financial position and reflects in almost every detail the Banik'a continued prosperity and progress. A comparison of the figures with those of a year ago gives the following results:— i Capital.—The capital of the Bank still stands at £2,000,000. The Reserve Fund.—For the two years previous 4o the one now under review the reserve fund was added to by £200,000 per annum. The reduced profits for the year have not admitted of our making quite as large an appropriation on this occasion, but we have been able to set aside £lso,ooo—an amount which, under the circumstances, we consider very satisfactory. The reserve fund after this addition will stand at £BOO,000. With the balance proposed to be | carried forward, after payment of diviI dend, the reserve fund and undivided I profits will amount to upwards of £8(14,-00-o.

iXotes in circulation, which stand at £919,329, show- a slight dicivase as compared with the ..previous year. Deposits show the substantial increase of £2,140,448, the total under the heading of deposits standing at £14,087,G51). To larger Government credit balances is due the major portion of the increase, but hoth fixed and free public deposits show very considerable expansion. Fixed deposit rates have been lowered during the year, but, notwithstanding this, the volume of the deposits continues to be well maintained.

Bills payable and other liabilities are less by £344,502 —the decrease oemg mainly in bills payable and of no special significance. Cable transfers are increasingly used in the making of London payments, and consequently the amount of drafts at usance sold is a steadily decreasing quantity. Turning to the assets side, a strong position is disclosed. Coin, bullion,,money at short call, etc. —The increase in deposits rendered advisable a corresponding increase in cash assets. Coin and cash balances are greater by £388,688 than at March, 1909; money at short call, Government and other securities in London, exceed last year's totals by £2,028,610. Bullion also shows an increase of £30,108. i may say that the totals under this heading, plus the amount of bills receivable and investments in the colonies, equal 65' per cent, of the total liabilities to the public —a very strong financial position. Bilte receivable, in London and in transit, stand at £2,626,561—an increase of £454.859. The greater volume of produce bills, incidental to the expansion of the Dominion's exports, and enhanced values of same, account for this. Investments hi the colonies stand at £'l,l-14745—a ■ sligpit increase on mst year's total. Advances—Bills discounted are less by £247.272, and other advances by £665,159, than at March, 1909. The growth in the Dominion's exports and the favorable price's obtained for the majority of our staple products have resulted in debtors being able to largely reduce their obligations ;to the Bank. The shrinkage in advances and the increase in deposits show a very substantial .improvement in the position of the public with the Bank, the result of the cautious policy adopted throughout the country during the financial stringency of the previous vear. * Assets Realisation Board Assets—Further sales have been effected during the year, the movement of the accounts being shown in the following table:— At3li/3/'O!).At3l/3/'lO

I Balances owing by purchasers .. £330,931 £280.899 Other assets unrealised • • «0,778 _j^l2 £403,709 £333,291 Xo reasonable opuortunity will be lose of disposing of the balance of the properties. ' '.ii ■Landed property and premises.—Dmin," the last few years the growth of the Bank's business' has necessitated the erection of new premises at a nunrbcr ot points, and considerable additions and alterations to existing premises. Lmdel property ami premises now stand at £359.790—an increase of£13,181) on last year's figures. The Bank has, since 31st March, completed the purchase of the freehold of the Mercantile Bank's chambers in Collins street. Melbourne.--and the business of our Melbourne branch will presently be transferred thither. We regard the acquisition of this property as a verv satisfactory transaction, and believe that the better position our olliee will in future occupy in Melbourne will result in an increased and more profitable business being transacted by the Bank in that citv.

Profit and loss—After pa villi; the £40.(100 interest on guaranteed sl.o'.di and makina nil necessary appropriations, including provision for the Bank's annual "rant to the .provident fund and lionus to the staff, as well as allocating the sum of .-£15.0(10 in reduction of Hank premises and furniture accounts, the net profits amount to £250,385, as compared with £313.150 Inst year. After adding the amount'brought forward from last year ( e(iO.OOS), «nd deducting the amount of interim dividend of 5 per cent. on preference and ordinary shares paid in December (.£50.000), the sum available for distribution is £270.384, as against £317.248 last year. The directors now propose to pay a further dividend of 5 per cent, and a 'bonus of 2V : , per cent, on ordinary -shares (making 12V 3 wr cent, for the year), and a fur-

ther 3% per cent, on preference shares (making 8% for the year). The total amount distributed to" shareholders for the year will therefore be £ 100.250. Of the balance remaining' it is proposed to transfer, as already mentioned, £150,000 to the reserve fund, and to carry forward £04,134. In. view of the considerable reduction in advances and discounts, and of the increase in the deposits, a shrinkage in the profits was only to be expected. The position in regard, to certain sources of revenue, usually profitable, was also unsatisfactory during the year, and the Bank was therefore 'working in the face of adverse conditions. Taking all these circumstances into consideration, we have reason to be well satisfied with the result. The year upon which we have just entered has opened well, and, given a continuance of favorable conditions, we hope to be able, when we meet to consider the next annual accounts, to place before you a report showing somewhat better results. GENERAL REMARKS.

Wihen addressing you a year ago, in the course of my remarks I said: "It would be idle to deny that a monetary stringency is being felt in New Zealand, and it is mast disconcerting to have to admit, in view of the long period of prosperity—covering practically fifteen years—that a sudden drop in values of our primary products for one season only should cause such a financial disturbance as we have been experiencing. The sudden fall in values, however, was not wholly responsible for this. If we seek other causes, we have to recognise that they will be found in the inordinate prices paid for land and general extravagance amongst all sections of the community."

To-day the conditions are reversed—the monetary stringency has disappeared, and we have instead an abundance of loanable credits. The cause which tedi to the stringency of a year ago was in the main, the sudden fall in values of our primary products', and the cause for the present plenitude of money is the rise in the values of those products anl the larger volume of production. The export returns for the year ended 31st March, 1910, compared! with the figures for the previous year, show this very clearly. The figures are worth recording, and they are as follow: —

Year ended 31st March: 1909 1910 Wool 5,537,8131' 7,941.655 Sheepskins .. 527.710' 703,180 Frozen me.it .. 3.362,725 3,485.256 Dairy produce .. 2.287.654 2.529/>OS Gold' .. .. 1,942,968 1,99-2.18'.) Tallow 520,952 664,046 Kauri gum .. 444.309 540.729 Hemp .. ;. 310,364 373.145 Timber .. .. 366,524 352,840 Grain 140,751 859,967 Other T .Z. .produce 1,143,827 1,550,261 £16,597,645 21,290,436 The only item in the list to show a shrinkage is timber, and the decrease is very small, amounting to only £13,684. Of "the total .gain of £4,002,791, wool alone accounts for £2,403,794, equal to more than 50 per cent. This gain is due 'both to increased output and enhanced .prises, the figures approximately being as follows: — Total Average Value, per bale. March 31. Bales £' £ 1910 .. 524,652 7.941,655 15 1909 ... 480,141 5,537,861' 11 2-5 Increase 38,511 £2,403,794 £3 3-5 The values are those at the port of shipment, and are extremely interesting. Taking a period of five years, the figures are instructive as showing the wide fluctuations to which this commodity is subject:— March 31 lbs. £ 1900 .. 144,145.196 6,028.093 1907 .. 165,227,6-28 7,529,188 1908 .. 157,951,854 6,063.436 1909 .. 179,074.074 5,537,861' 1910 .. 204,388,824 7,941.655

Dairy produce shows an increase of over half a million sterling as compared with the previous year, and this industry has in recent years ibecome a very important factor in our export trade. The values of the butter and cheese exported during the past five years are instructive, and are as follow: Butter Cheese. Total. Mar. 31' £ £ £ 1900 i .. 1,443,284 205,084 1,708,368 1007 .. 1.522,113 449,676 1,971,789 1908 .. 1,338,393 792.318 2,130,711 1909 .. 1,422,198 805,456 2,287,654 1910 .. 1,,634,864 1,185,704 2,820,508>

In four years this industry show's an expansion of over one million sterling, but about half the amount was gained in the last year. A fair proportion, ■however, was •obtained .by advance in values.

At one period of the past year, the frozen meat trade was in very precarious position. The dumping of large supplies on British markets at a time when the consumers were unable, to afford even the normal .price proveu disastrous. Values declined enormously, resulting in big losses to nearly all sections of the trade. At the sanie time, it must be admitted that the low prices at which our meat was pushed for sale secured for it a splendid advertisement, and the results are to he seen in the higher range of values that have ruled since about October last. Notwithstanding the adverse features referred to, the year closed with a substantial increase in the v'alue of the exports in this line. Continuing the five-year comparison, we obtain the following:—

March Beef. Mutton Lamb. 31st. £ £ £ 1906 .. 181,519 1,094,107 1,158,591 1907 .. 380,984 1,345,400 1,430,122 1908 .. 420.205 1.230,451 1,457.373 Um) .. 455.012 1.209,590 1.617,934 1910 .. 540,392 1,042,727 1,803,040 The lasfcyear's increase, it will he seen. occurs in lamb and beef. The export of, grain, whole and ground, has risen from £140.751 in 1908-9 to £859,907 in 1909-10, due to the more favorable harvest. While the exports exhibit so considerable and satisfactory an expansion, it. is equally satisfactory'to note that the imports liave been' materially reduced, makino- the trade balance a distinctly favorable one. Including re-exports and specie, the total value of the exports for the past financial year amounted to £21,491 809 while the imports for the same period totalled £15,353,581, showing an excess of exports over imports amounting to £0,138,228, sufficient, to pay tlie outside obligations for interest, etc., and also to meet any deficiency that may have arisen in the previous year. . This favorable trade situation has naturally been reflected in the banking figures for the year, and the change that has resulted liiav be seen in the aggregate figures of the'fixed and free deposits (excluding fiovernmeiit) on the one hand and the advances and discounts on tlie other ior a series of years. The figures are as under:

March Free Fixed Total 31st. Deposits. Deposits. Deposits. £ £ e 1000 0.712,010 0.701.100 10.503.170 1007 11,343.582 0.700.511 21.044.003 1008 11.534,870 0.553.004 21.055.573 1000 10.100.038 0.083.042 20.084.880 1010 11.585,410 10.570,352 22.155.it12 Last year the total deposits were less than in the .previous year by £1,003,003, whilst for the year just closed there is an increase of .£2,070,882—an improvement that is almost astonishing and very

gatitying to ine whole community. The advances and discounts, compared in the same way, show as follow:

There is a substantial decrease in the advances and discounts, clearly proving that the customers of the Banks have been able to meet their past obligations to the institutions. Other favorable indications are that the note circulation, which decreased in 1-909, has since expanded, whilst the returns of the Treasury for the financial year show a revenue of £9,238,201 or £237,070 more than in the previous year. The remarakble recovery which the foregoing facta and figures illustrate and emphasise has naturally caused land values to be maintained at a high level, and in some case to advance; and the unprecedented advance in the values of dairying land in particular has been the cause of considerable concern to 'bankers and financiers. It has suggested itself to me that some authentic details of what is possible under modern conditions of scientific farming and with the use of the latest dairy machinery, would be of interest to you. The best result obtainable in New Zealand, of which reliable information is available, is the annual return of, approximately, £l-1 per acre. This has been achieved on the Waimate Plains, near Manaia, on a 32-acre farm with 24 cows, the actual returns from '• which, for milk alone,' were £360. If from this two-fifths be deducted as the cost of labor, there is a net result to the landowner of £2lB, equal to £6 15s per acre, or £9 per cow. This splendid result is the exception rather than the rule, for the total return from cows kept for dairying in the Dominion (536,316) only amounts to, say, £4,080,000, made up thus:— Butter exported for year r-n.KI llar.-h 31, 1910 .. £1,634,864 Uieese do., do., do., .. 1,185,704 Milk, butter and cheese for local consumption, say .. 1,257,927

Or a total of .. .. £4,078,495 Tf from tillis an average of two-fifths 'be deducted, the net result is, approximately, .'-2.445,001). or about £4 10s per cow. or just about one-half of the 'best results which. I have mentioned. But we cannot take it on the favorable basis of £i) per cow, for a recent investigation has shown that a large percentage of the dairy cow.-? of the Dominion uo not average u gross.return of £B. Indeed, it i-s on record that some larse herds have (riven a gross yield of less than £4 per cow. There is a wide margin of difiemiec between the extremes, and it is quite obvious that there is great scope for the scientific expansion of the industry. It is a question, thereore, whether the time has not arrived for the Government to take an active part in a wholesale way in the matter of herd-testing. A 'beginning has already been made, which appears to justify Government intervention, and with proper safeguards there seems no reason why herd-'testiiiii should not be 'carried out on an extensive and comprehensive scale. The milking machine and the low rate of interest at which money can be 'borrowed from the Advances to Settlers Department have also been factors' in ennancing the price of dairy land. The rise in the 'prices, of our dairy -products is, of coVse, mainly responsible for the higher land values in dairying districts. I h?.ve had prepared a table showing the annual prices paid for eleven years at one of our leading North Island cheese factories'. These show an increase of over 50 per cent, in the price paid to the farmer for his buter-fat, the basis on which all milk is paid for:— • Per lb of Butter-fat

Season ended: June, 1898 .. 7.71 9 .. 8.8 1900 .. 10.18 1 .. 9. i ■ 2 .. 9.95 3 .. 11.4 4 .. 8.2 5 .. 9.2 ' 0 .. 12. 7 .. 12.8 8 .. 12. For the live years ended June, 1908, the average price works out at 10.54il per 11). of butter-fat, and for the .ten years to June, 1908, the average is r0.30d per lb. The lowest price paid in the ten years to 1908 was 8.2 d in 1904, and the highest was 12.8 in 1907 a margin of difference amounting to 4.(id per lb. It is true that while the price ot all farm products for t\\e past half a century has shown a more or less steady and persistent decline, the. prices of dairy products of high quality have shown an almost equally persistent rise. Nevertheless, there is ever present the danger of a relapse, and it is quitt possible for the price of 'butter-fat to decline to the lowest level of the ten years as mentioned, which would represent a fall of about 33 1.-3 per cent. Such a decline would cause very serious trouble to farmers wlvo have paid hign prices for dairy land, and who have not brought their herds up to the highest posi.jle standard of productivity. The question of the immediate future is whether more money is to go into the value of the land or more in the improvement of the milking herds. In my opinion, and speaking broadly, the price of dairy land is on the average quite high enough at present, and to justify same greater attention must be devoted to the feeding and breeding of high grade stock. This work will take time and money to accomplish, but it must be faced if our dairy farmers are to continue to enjoy prosperity. A year ago I said, "What we want in New Zealand to-day more than cheap money is cheap land," and I am constrained to repeat, that. It is cheap land that is attracting immigration to other countries, and ■if we are to secure an increase of population by immigration we must be able to offer to the newcomer some advantages. Notwithstanding the severity of the Canadian'climate and the many drawbacks to .farming there, people are floeking to that Dominion, attracted mainly by the opportunity offered of securing land at an exceedingly cheap rate. It is becoming a difficult matter for New Zealand to keep its farming population, for many are leaving, and have left, for Queensland and other parts of Australia. The Government could, no doubt, do a great deal by making available for settlement the. native lands now lying idle; but I will not pursue this subject further, as I dealt with it to some extent in'my remarks last year.

As you are aware, the Bank of England rate (reduced to 3% per cent, on 2ml instant, and to 3 per cent, on Otli idem.) was advanced to 4 per cent, in mid-March, a movement that may he said to be singular, because it is about 32 years since a similar movement was recorded. It is usual to see the bank rate reduced in the first month of the New Year and to reach the jowest point in June. The cause of the advance was apparently the heavy borrowing on the part of the Biuish Government and the demand for gold from foreign countries. However, the undertone of the money market has been cheerful all through, the

| Stock Exchanges have been keeping busy, tiie capital applications have been on a large scale, whilst British trade shows that there is a decided .improvement in the industvi.il situation, and these are factors that are most encouraging to New Zealand. How the situation is viewed on the Continent of Europe is shown in the report of the Directors of the Dres lner Bank, which states:—"The first to months of 1010 have ushered in a, sonv.vhat quieter state of business, and it is probable that •international commerce will continue to exhibit a.certain amount of reserve until j the economic conditions and measures of domestic policy, both in the United States of America and Great Britain, shall have settled down. If, however, as may be assumed, the world is spared political complications of a serious I nature, it seems probable that we are on the threshold of a prokvnged period of easy money leading up to a further' manifestation of the spirit of enterprise which will affect not only trade and industry in general, but also- the building trade, which has for so long been dormant. The favourable position of agriculture, we are glad to say, in no small degree contributes to this prospect. Although we do not expect to see in the near future a renewed high tide of industrial activity or n generally pronounced upward movement of prices on our Bourses', we have no reason to doubt that the capital available in banking business will find suitable outlet for lucrative employment." In New Zealand to-day there is an i abundance of loanable credit, and yet, i I am bound to say, there is a fceliug of want of confidence prevalent in the community. Money is not flowing into those channels which should exist in every new country, and which do exist in New Zealand. The financial Situation is infinitely better than it was a year ago, but that in itself is not sufficient. We want the capital available in the country to seek an outlet in industrial and other enterprises. The spirit of enterprise is, however, wanting. To what this unsatisfactory state of things is to be attributed is a matter for speculation and conjecture. Politic* are of course outside the province of an address such as this, but it is quite within the scope of my remarks to note the existence of-a condition of affairs so detrimental to the development, progress and financial prosperity of the Dominion, leaving to others the task of seeking out the cause and applying the remedy. New Zealand is a nation in the making, and requires all *he capital it can command for its development. It should be careful to do nothing to make capital shy of entrusting itself within its borders. In this connection let nfe give you a short extract from the speech of the Vice-Presi-dent of the Bank of Montreal to- the shareholders at the last Annual Meeting on December 6th, 1009. He said:—

"The most important change from last year in the statement submitted to you is the unusually large increase in deposits amounting to thirty-six million dollars. Pairt of it is temporary pending large payments' in connection with special, transactions; part is the natural increase from depositors as a result of the prosperous condition of affairs in this country; but the largest portion of the increase arises from money brought into Canada from other countries. It is quite possible that if the apprehensions expressed in many quarters as to the consequence of the new methods of British taxation sue realised, deposits from this last source may be still further enlarged. It is very important, therefore, that nothiug should be done in Canada by injudicious legislation, the exploitation of doubtful enterprises, or otherwise, to stop this How of capital."

These remarks might very appropriately be incorporated in this speech as equally applicable to the Dominion of New Zealand, and with that observation, I pass from the subject. Directors.—As most of you are awar«, Mr. Willjam Milne and I were reappointed by the Government Directors of the Bank for a further term of two years as from Ist April last." Iti December next, Mr. William Watson—one of your representatives—retires, and he intends offering himself for re-election. You will notice that our colleague. Mr. .lames B. Eeid, is not with us to-day. He'left the Dominion for Europe in April last, but is expected to return hither towards the close of this year. During his residence in London, he will be associated with our Board in that city, and I have no doubt that both he and the members of that Board will profit 'by the interchange of ideas on Colonial and English banking and other matters. We desire to again place on record our appreciation of the unremitting care and attention devoted to the Bank's business by the London Board of Directors.

Staff—Our General Manager, Mr. William Callender, is absent from New Zealand on well-earned furlough. When in England he will make a thorough inspection of our London Branch, and report fully to the Head Office Board. We look for .his return to Wellington in November next. Meantime, his duties «re being performed, to our en tire satisfaction, by Mr. A. E. Millsone of our senior inspectors—who possesses a wide and intimate knowledge of the ramifications of the Bank in all its 'branches. •

It is gratifying for me to again testify to the able and loyal manner in which the staff in New Zealand, Australia, Fiji and London have carried out their responsible duties, and I feel confident you will endorse these remarks by extending to them a hearty vote of thanks. As a tangible proof of appreciation, the Board dins already paid the staff a bonus of 5 per cent. Gentlemen, 1911 will be the jubilee year of the Bank. Now, assuming that the profits of the Bank for the current financial year can be maintained at ihe' same level' as that of last, year, We ought to be in a position to show in our next balance sheet the Reserve Fund and undivided profits at not less than €1,000,000. This, in my opitiinn, would justify the directors in recommending that such nu important event as the Bank's jubilee and the creation of so substantial a Reserve Fund should be signalised bv the payment of a slightly increased dividend or bonus, say to the extent of 'iy, pe l, cent. This indication will, I trust, inspire you with hope and confidence as to the, futute. ,

I now formally move the adoption of the report and balance sheet. Tf this resolution he affirmed, the dividend and bonus proposed—namely, 3-Y, per eent. on preference shares, making 8% per eent. for the year, and V/<> per cent, on ordinary shares, equal to W/., • per cent, for the same period, wi'l he" payable in Wellington on Monday, 20tli instant, and at Branches on receipt of advice, REXONA. The Rapid Healing Oiiihin-it. mre? w it remarkable rapidity sores, ulcers, burns cuts', bruises, eczema, chilblains, and al diseases of the skin. Sold in triangula nots at Is fid and 3s. Obtainable at Bui lock and Johnston's. For Chrnm* Ches* Complaints, Woods' Iwwit Pepoermhrt Cure. 1/«, B'B. __i .....''»*-.' '■" - '"'"-i"—^

March Advances. Discounts. Total. 31st £ £ £ MM 13,!)!U,.S22 2,143.483 10,135,305 mil" 15,5.51:547 2,fl:)2.S()8 17,554.355 lflOS 18,542.3K) 2.0!)5.7!)5 20,G3S,105 Kim 18,180.009 2,13-2.5(i2 20,319,471 1010 10.178.128 1,815.317 17,093,445