TRADE AND FINANCIAL OUTLOOK.

Taranaki Daily News, 6 December 1915, Page 6

TRADE AND FINANCIAL OUTLOOK.

STATEMENT BY 'BANK OF N.Z. CHAIRMAN. Wellington, Friday. At the half-yearly meeting of "the Bank of New Zealand to-day, Mr. Harold Beauchamp (chairman of directors;, said:— THE OUTLOOK. Turning now to matters of local concern, I would remark that prospects continue good for all descriptions of the Dominion's primary products. A wider market for wool lias been assured by tho conditional removal of the embargo placed, shortly after the opening of the war, on exports of wool to neutral countries. The export of wool to certain neutral countries can now he arranged upon compliance with suc-h formalities as are deemed necessary for the purpose of assuring that the wool will not reach the hands of the enemy. The effect of this has been to enlarge the area of competition, and to appreciably stimulate prices, more particularly for the class required bv American buyers: that purchased on Bradford account has not advanced to a correspondingly high level. The arrangement, under which the whole of the Dominion's meat export is commandeered by the Government, still continues in operation and, I believe, lias worked on the whole smoothly and quite satisfactorily. Tlie aggregate payments, made by the Imperial Government in this connection and disbursed by the Dominion Government on its account, amount, up to 24th ultimo, to £5,914,624'. The pressure on storage space and the shortage of insulated steamers to carry the meat away, which were features on the last season's export, are not likely to recur this year. Additional storage will be available in the Dominion— the result of fresh constructions completed or in progress—in addition to which the p'rospeetive supply of carriers is said to be adequate. An analogous call has also been made upon the cheese product of the country, the Government having, it is understood, Imperial orders to requisition.ls.ooo tons of cheese, to the value of about £1,000,000 EXPORTS AND IMPORTS. The trade returns exhibit a marked fluctuation in favor of the Dominion. For the year ended 30th September last, the exports were £20,710.000 and the imports were £19,7®6,000, leaving a surplus of £9.924,000, The figures compare as follows with those for the vear ended 30th September, 1914: EXPORTS. £ 30th. Sept. 1914 23,759.000 30tli. Sept. 1915 .... 29,710,000 Increase £5,951,000 IMPORTS. £ 30th. Sept. 1914 21,037.000 30th. Sept. 1915 19,786,000 Decrease £1,271,000 Together, the figures represent a net improvement during the year in the Dominion's financial positon of £7,222,000. More than half of the increased value of the exports is due to the higher values that have been ruling, and the rest represents increase in the quantity exported. These are very satisfactory figures, but the growth, as far as dependent upon increased value, is of course quite abnormal, and due to the exceptional conditions at present existing, which will undoubtedly pass away upon termination of the war. or shortly thereat'""'. It would be hardly necessary for mc to utter a word of warning against, the assumption of liabilities, dependent for their satisfactory liquidation upon maintenance, for any length of time, of the present high range of prices. It would be folly to assume for one moment that such abnormal prices can continue after the present huge expenditure of borrowed money incidental to the war comes to an end. It is almost certain that, immediately the end of the war is reached, prices will drop heavily, and the recoil may carry us to a point of depression as abnormal as that of tlie present inflation. It will be wise policy on the part of everyone to keep the probability of "lean years" to 'come steadily in view REVENUE AND EXPENDITURE. The revenue of the Dominion is well maintained, and is exceeding the estimate made by the Minister of Finance for Budget purposes, in which tlie estimated revenue for 1915-16 was set down at £11,070.254, as against actual revenue for 1914-15, £12,443,525. Tlie actual revenue for the first seven months of the financial year, i.e., to 31st October last, was £8,099,402, whieh compares with £0,022,836 for the corresponding period of 1&14 —a surplus of £75,508. The estimated expenditure for 1915-18 is £12,053,242, which leaves a deficiency on estimated revenue of £827,941. This is without making provision for war pensions, and for interest and sinking fund on war loans. The former are estimated at £1,000,000 per annum, and the latter fis £700,000 per annum, but the full amount will not fail to be provided during the current fiscal year. In view of the above, additional taxation has of course become necessaryIncreases in income tax, in stamp duties (including a mortgage tax of 5s per cent.), and in a few lines of customs and excise, together with an increase in the rates of the post and telegraph, and railway services, have accordingly been made, and these it is believed will suffice to cover the extraordinary additional expenditure referred to, being estimated to produce £2,032,000 of extra revenue. BANKS' TAXATION In this readjustment of taxation, necessitated by the financial situation resulting from the war, the banks have, I think, come in for more than their fair share of the additional impost. I may explain that banks are assessed for income-tax not upon their actual earnings, but upon a hypothetical income based upon a percentage of their aggregate assets and liabilities within the Dominion. This percentage was formerly 153, but under the recent Finance Act it has been increased to 30s per cent. Our hypothetical taxable income has therefore. at one stroke, been doubled. But this is not all. The tax we have to pay lias also been doubled. It was formerly Is 4d in the £; it is now 2s 8d is the £. The practical effect, therefore, of these arrangements is. you will see, that our income-tax has been quadrupled, and that wo shall now have to pay at the rate of 5s 4d where previously we paid only Is 4d.

Hitherto our income-tax lias amounted to about £15,500 per annum. In future it wili be about £02,000 per anum. Added to the land tax and note tax, our total contribution to the taxation of the country will reach probably about £120,000 per annum. We are not complaining. The Bank ia doing well and therefore, meantime, cheerfully shoulders the burden iakt upon others, and we therefore look forward to the time when some remission may be allowable. The anomalous position is that, while it purports to be an "incometax," it is payable altogether independently of our actual income. It is quite conceivable that a Bank might sustain losses which would leave it practically without iiKome for some particular year, but that would not relieve it of liabilty to pay income-tax under this assessment. Viewed from that standpoint, I think most people will regard the basis of the tax as inequitable. THE DOMINION'S FINANCIAL POSITION. Tlie artificial prosperity, created here as m the Old Country, by the expenditure incident to the war, continues to be reflected in the banking returns of the Dominion. The returns furnished to the Government of quarterly average banking figures at 30th September last, compare as follows with those for 30th September, 1914: 914 1915 £ £ Interests bearing deposits '. 10,525,900 11,809,100 Non-interest bearing deposits .. 14,172,800 17,545,900 Total .... 25,001,700 29,155,000 Increase — £ On Interest bearing Deposits 7'80,200 On Non-interest bearing Deposits 3,373,100 Total increase ■ 4,353,300 1914 1915 £ £ Discounts 1.745,000 1,357,700 Other advances . 22,717,000 21,991,200 Total .... 24,462,000 23,348,900 Decrease—- £ On Discounts ...... 387,300 On Other Advances 720,400 Total decrease 1,113,700 This represents an improvement of the position between the public and the Banks, amounting to upwards of £5,250,000 during the year. It is safe to say that this is an unprecedented movement in the banking experience of the Dominion. Never before has the public been in such an easy financial position or in command of such ample resources. The Post Office Savings Bank figures tell the same story. For the year ended 30th September last, the Post Office deposits amounted to £12,943,453, and withdrawals to £10,356,9*12, showing an excess of deposits over withdrawals of £2.580,510. ' The excess in tlie second half-year was considerably greater than that in the first, viz.:— First half ended 31st March, 1915 1,188,07-1 Second half ended 30st Sept. 1915 1,398,445 Excess for the year .. £2,586,516 The position in a measure indicates a slackening of industrial enterprise, and a heavy drop in imports—the latter being due to the inability of manufacturer.? in the United Kingdom to execute orders owing to shortage of labor, and to inadequate transit facilities. Ii is well, however, that our financial situation is so easy, for it places us in a position to bear our share of the war expenditure—local and Imperial—without difficulty. The abnormal profits that are being made by the producers-of this country and others as the result of the war, should be freely placed, at the disposal of the Empire by subscription to war loans—or otherwise —in order that there may be no lack of financial strength in pressing the war to a triumphant conclusion. There is, lam glad to say, evidence that our people as a whole feel this and act accordingly. The large donations that liave been made to war and benevolent funds testify to the public recognition of the obligation, and the recent success of the Government's local loan of £2,000,000, which was largely over-subscribed, furnislies strong additional testimony. WAR FUNDS CONTRIBUTION. In addition to the subscriptions it has already given to the various patriotic funds, the Board lias carefully debated the question of making a further substantial contribution to the National War Fund for the velief of Wounded Soldiers and their dependants. We have come to the conclusion that the Bank should make some such contribution but, before actually deciding to do so, we have thought it fitting to refer to the matter at this meeting in order to ascertain whether our proposal is in harmony with your The amount we would propose i,? £IO,OOO, and, unless an adverse resolution is proposed at this meeting and commands substantial support from the proprietors, it is our intention to vote tlmt amount as a donation to the National Fund, provided we are satisfied as to the manner in which the Fund is to be administered. Assuming that no general dissent is expressed. I think it should be clearly understood that, if the necessity exist, the Bank will not hesitate to make a further contribution to the National Fund between this and the date of our next meeting—the amount of such further contribution to be left in the discretion j of the Board. I j ' I