WAR AND FINANCE.
INTERESTING OBSERVATIONS. BY CHAIRMAN OF BANK OF NEW ZEALAND. ' NEW ZEALAND'S WAR PROFITS. Wellington, Yesterday. Mr. H. Beauchamp, Chairman of Directors of tin: Bank of New Zealand, at the anniul meeting of the Bank to-day, made reference to the war. He said, inter alia: To-day, fifteen states, or countries, are in open war, viz., Britain, France, Russia, Italy, Belgium, Portugal, Montenegro, Albania, Serbia, Japan, Egypt, Germany, Austria-Hungary, 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 as one writer in a British magazine has said, "nothing has happened in this war exactly as it was thought it would happen." Both sides have had to learn many new le>sons in warfare, in organisation, and in application; and now, after nearly two years of hostilities, tne end seems still a long way 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 one subject 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. 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 amount of capital that is being dissipated in the present conflict is to be reckoned in thousands of millions. The Economist (London) recently presented a table showing tho cost of the war to the European countries, together, with the addition to their respective debts, and the interest per anmiirt involved The figures are an estimate to March 31. 1910, and may be accepted as approximately correct. They are:
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. Galieia 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 rost of pensions: the loss of human capital, as measured by the killed and ■permanently disabled —all these must be included' in the reckoning. Up to the end of last year the numbers killed, died nvm disease, and permanently incapacliiGcl for the ten countries I have named are assessed at 3.950,000; and the loss of human capital at £1,58,j,000,0f10. And the wai is not over, nor is the end in sight. BRITISH TRADE. I With so large a percentage of Allied shipping engaged in war services, with every available factory operating in the production of munitions, and with a large proportion of the adult population engaged in war work, it is not surprising that British trade, as regards exports, has shrunk. The trade" figures of the United Kingdom for the past five! years are as follows: I
There is, it will be observed, a very large increase in the imports, due to the United Kingdom having to import large juantitigs of raw inater'al for mu-
nitions, also foodstuffs, and to the enhanced prices of commodities ruling because of the war. . The huge expenditure of the Allies has proved highly beneficial to all neutral countries,' and also to many of the belligerent countries. The United States and Japan have, perhaps, secured, relatively, the most' prolit out of this orgy of expenditure. BRITAIN'S STRONG FINANCIAL , POSITION.
In spite of the fact that Britain lias to bear the heaviest financial burden of all the Allies, the value of the British pound sterling in the various markets of the world stands relatively higher than the standard money of any other belligerent. We may well be proud of the achievements of British bankers and financiers. In one way or another, Great Britain is paying for its huge imports without resorting to the shipment of gold in excess of its receipts of that mefal. America, since the beginning of this year, has not been able to attract gold or securities from London in such quantities as it had been doing for some time previously. Roughly speaking, America's power to demand gold or securities represented, in 1015, about £280,000,000, of which £50,000,000 was paid in gold, and £200,000,000 in securities. This year it is estimated that the United States will have a balance in her favor of about £300,000,000, the whole of which it is thought may be settled by means of securities. While is seems probable that a cheek will be placed on the withdrawal of gold from London, the output of the precious metal is increasing under the stress of war. Last year's production was the highest in the world's history, the Rand furnishing the bulk of the increase. The Australasian output was valued at £9,202,500, as compared with £9,024,300 in 1914; and the tendency, for some years past, has been in the direction of shrinkage. The British Umpire controls the larger portion of the world's production of gold. To last year's total of £06,915,000, it contributed £59,015,000. It is satisfactory to note that the Bank of England lias maintained its reserves of gold at a high level, the amount held at May 17 being £58,505,000. The Bank rate has remained steady throughout the whole period of the war at 5 per cent.
INTER-EMPIRE TRADE. While on the subject, of British trade, I may appropriately refer to a matter which appears to be commanding a considerable share ef attention in the Old Country at the present time, namely, the question of future Empire trade. A strong advocate for trade within the Empire, with a view to the Empire's independence and self-sufficiency, has lately come to the front in the person of the Premier of the Commonwealth, Mr. W. M. Hughes; and his agitation seems to have made a strong impression jand appears likely to bear some fruit. jT'e fiscal harriers, of course, constitute | the greatest obstacle in the way of free 'trade within the Empire, but even that I difficulty should be susceptible of adjustment by the combined effort and in- ! telligent handling of British and Colonial statesmen. If anything effective is to be done the present opportunity should ■ not be lost. The bonds of Empire, already cemented by the blood of the | Empire's sons, are in need of strengthening probably in no other direction as much as in this, and it is to be hoped that the statesmen will treat the matter sympathetically and with earnest intent—in which case I doubt not that developments of substantial value and far-reaching effects may be expected to result. ' Much has been said about the part that the '''silver bullet" will play in the determination of the war. Now, assuming that, in case of need, both France and Russia would send gold to the Bank of England, it is interesting and instructive to compare the relative gold strength of Britain and her Allies with that of Germany. We find that, excluding gold in circulation, and in the hands of the Banks, the figures are as follows: £ British Empire ...... 124,080,701 France 200,011,000 Russia 15T,175,000 Italy ; 47,286,000
550,152,701 Germany and Austria 122,250,000 Bal. in favor of Allies 430,803,761 BRITISH PREPARATIONS. Ever since that fateful day in August, 1014, the British Empire has been engaged in,making "preparations" for war, and, incidentally, fending off attacks. Hugh blunders have been committed, but, on the whole, a wonderful result has been achieved. Britain has always been a first-class naval Power, and today 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 currier, and insurance underwriter. We may go a step further and say that, while the needs of the moment have thus been met, the future has not been neglect'edj. 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 has 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 respected by the nations of the world, than ever she was before the war. She is applauded for being faithful to her friends, true to her word, generous 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.
NEW ZEALAND'S 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 truly, 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, and dairy produce, arid prices have reached a particularly high level. To realise to . '>l extent we have profited by the wrf . is only necessary to give the expur . . import figures of the Dominion fw j,e last few years. The figures srg:—
Year ™dMl Excess of March 31. Imports. Exports. Exports. ££ * £ 1916 21,308,431 33,408,3!) 1 ■12,159,000 1915 19,805,057 27,4(15,803 7,060,740 1914 21,835,154 23,438,428 1 603 274 1913 21,309,05S 22,043,205 1,333,577 Specie is excluded from those figures. Comparing 1910 with 1913 it will be noted that the exports have increased by £10,825,126, or very nearly 48 per cent.'; and the excess of exports over imports has risen from £1,333,577 in 1913 to £12,159,900, thus furnishing us M'ith enormous credits. This improvement in the trade of the country is also reflected in the banking deposits of the same period:— March Free Fixed Total 31 Deposits. Deposits. Deposits. £ £ £ 1916 19,091,949 12,182,104 31,274 053 1915 15,958,732 10,570,507 20,82!>!23!) 1914 13,475.771 10,554,479 24,030,250 1913 13,460,530 10,426,720 23,887,250 It wiil he seen that, as compared with the ye™ 1913, the free deposit; have increased by £5,631,419, and the fixed deposits by £1,755,378, or, together by £7,380,797. Advances and discounts also reflect financial ease, as they have remained practically stationary, The figures should be placed on record. They are as follows: March
31 Discounts. Advances. Total. £ £ £ 1010 1,487,(155 22,240,237 23,733,892 1015 1,034,418 22,100,144 .23,740 502 1914 2,017,107 21,049,043 23,000,750 1913 1,967,351 21,025,105 22,902,450 It is not only the customers of the Banks of issue that are accumulating large credits. Those who find it convenient to place their small savings in the Post Office Savings Bank arc also increasing their holdings. For the past three years the deposits in and withdrawals from the Post Office Savings Bank were:—
With- Excess of Year Deposits, drawals. Deposits. £ £ £ 1915 13,706,057 11,294,074- 2,411,083 1014 11,904,321 10,003,017 1301,304 1013 11.280,702 11,041,454 245,248 The savings last year, it will be seen, were very considerable. Roughly, they were equal to about £2 per head of the entire population, which is a very creditable record. To quote other statistics in support of the statement that the Dominion is prosperous would be to needlessly weary you. All such statistics serve only to demonstrate what must be self-evident to everyone.. Our trading figures would have, been substantially greater than those mentioned, but for the fact that shipping acommodation has been much restricted. For instance, wool, hemp, butter ami meat have been accumulating because of the insufficiency of tonnage, and yet the conditions prevailing in New Zealand are very much more favorable than fliey, are in most other places. It was fortunate that the Imperial Government found it necessary and convenient to commandeer our meat
for the onus of providing „he requisite insulated refrigerating shipping space was thereby thrown upon the Government, and we have consequently not suffered to any serious extent. The gains and losses of the war to New Zealand are obvious. High prices for produce have brought us considerable wealth, which, probably, mould have boon 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.
Looking to the future, we may safely 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 far-' reaching character may be expected to take place. So far as the Dominion is concerned, we shall be faced, at the close of the wi;r, with two questions—both vital to our interests. New Zealand is a producing country and, by necessity, a borrowing one, and the state of the produce markets and the money markets, will have considerable bearing 011 our future prosperitv and' development. The present war is on such an enormous and unexampled scale that we have no reliable precedents to guide us iti forecasting post-war conditions, and, as far as the produce markets are concerned, it is particularly difficult to nwke assertions with confidence. Europe will almost certainly be compelled to economise— Great Britain quite as much as the other belligerents. Now, assuming the present consumers of our products will bo forced to economise, it is obvious that they will be unable to pay high prices for the foodstuffs wo send them. The values of all our products, therefore, must naturally be expected to fall, and lo- fall perhaps rather heavily, from those current to-day. The 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 {hat the products of the soil —to which it looks for its chief support and wealth—are. increasing in a much greater ratio than its population, whereas, in the Northern Hemisphere, the contrary is the case. Tt seems, therefore, that should we he faced with any set-back after the termination of hostilities, it will be but of :i temporary character, and we may therefore look hopefully to the future.
THE MONEY MARKET. As regards the prospects of the. money market, there are "rounds for speaking with more confidence. 80 much capital will be wanted in Europe 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 l'jtes, the British Government might find it necessary to continuo the present restrictions 011 capital issues. To-day, as you are aware, no loan or issue of shares can be placed 011 the London market, without the sanction of the Treasury; and even in the case of maturing bonds and debentures, the permission of the Treasury is need,cd to arrange a. renewal, although both lender and borrower'are willing. There is nothing to prevent this embargo continuing for some time after the war has terminated. There are disquieting features in the possible post-war conditions, and for that reason it is of the utmost importance that the people of New Zealand, wilile they have the opportunity, should recognise the true value of economy. The more we save, the better we shall be able to assist the Empire now and to face the unfavorable conditions that must, I fear, inevitably follow the Declaration of Peace. This is, obviously, 'lie only prudent course to adopt, and' I the need, therefore, for economy cannot be too strongly urged upon everv of u}-3
Imports Exports Re-ex ports. £ £ £ . 1911 v:... „ 6S0,157.527 454,119,2 ns 102.7, 59.134 1012 . , 744,640.031 4S7.223.4 ,39 111,7 37.691 1913 . , 76S,734.739 525.245,2 :S9 109,5 75,037 1914 '. , 696,635,113 430,72l!.3 157 95.4 74,166 1915 . S53,756,279 3S4,647..3 36 9S.7 97,123
Serbia and Monteni Direct cost of war. £ .... 1,550.000.000 1,655,000,000 ..-.-. 1,423,000,000 300,000,000 120,000,000 egro 100,000,000 Add'n to Nat'l Debt. £ 1.380,000.000 1,000.000,000 1,500.000.000 400,000,000 120,000,000 100,000,000 Int.-per an. £ 60,000,000 95,000,000 75.000,000 ■' 20,000,000 • 6)000,000 8.000,000 5,210,000,000 5,400,000,0.10 271,000,000 Germany •. Turkey 2,100.000,000 140.000.IKKI - 2,100,000,000 1,150,000,000 150,000.000 30,000,000 105,000,000 60.000,000 0.0 00.000 2,000,000 Alliance -.-, . .i-. 3,370.000,000 3,430,000,000 182,000,000 All belligerents ... S,580,000.000 s.SoO.noo.ooo 453.000.000
Permanent link to this item
Hononga pūmau ki tēnei tūemi
https://paperspast.natlib.govt.nz/newspapers/TDN19160610.2.35
Bibliographic details
Ngā taipitopito pukapuka
Taranaki Daily News, 10 June 1916, Page 6
Word count
Tapeke kupu
2,896WAR AND FINANCE. Taranaki Daily News, 10 June 1916, Page 6
Using this item
Te whakamahi i tēnei tūemi
Stuff Ltd is the copyright owner for the Taranaki Daily News. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International licence (CC BY-NC-SA 4.0). This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.