The Daily News. MONDAY, JUNE 24, 1918. A BANKER'S VIEW OF THE SITUATION.

Taranaki Daily News, 24 June 1918, Page 4

The Daily News. MONDAY, JUNE 24, 1918. A BANKER'S VIEW OF THE SITUATION.

Following his usual custom when presiding at the annual meetings of the Bank of New Zealand, the chairman (Mr. H. Beauchamp), on Friday last, gave a review of the current events which more or less directly affect banking operations. On this occasion Mr. Beauchamp has spread his comments very extensively as regards the general situation, and liis unfailing note of pessimism has lost none of its volume, although he started his review by comparing Britain's struggle at the present time with her troubles of over a century ago, drawing therefrom the lesson that the same doggedness and tenacity of purpose which then carried her through will carry us through now, and that, with the assistance of the Allies, we shall see the war through to a victorious conclusion. "When, however, he attributes New Zealand's continued prosperity as being due to the war, he enters the domain of controversy, for it is a moot question whether, had there been no war, the prices of our products would not have been as high and perhaps higher than at present. Moreover, it must be remembered that the bulk of the purchase money for these products is being kept in the Dominion owing to the lack of facilities for imports, and the banks are reaping a rich harvest therefrom, the Bank of New Zealand's profit being £407,860, or over half a million if the balance from last year is taken into account. Mr. Beauchamp, after setting forth the large amounts paid by the Imperial Government for our produce (over sixty-four millions), and drawing attention to the large increase in deposits during the four years of the Avar (about eleven and a-half millions), uttered a warning against being misled by these figures into the belief that " all is well for the future," and he pointed to the huge sums raised locally by the Government for war purposes being spent largely within the Dominion, thereby " creating an artificial prosperity which cannot be expected to last longer than the expenditure of the borrowed money that is creating it, and that when all this money no longer circulates, there will almost certainly be a great contraction of business in every direction." The prediction is one that we should expect from this quarter, but it should not cause mtroh anxiety; rather may the producers look forward to an even better time than the present, for the world shortage of food and clothing is likely to continue for some years. It is, however, quite possible that these profits will be- mare evenlv

It is quite opeu to argument tljat " war prosperity " will not necessarily be temporary. Probably after the war the market prices of our products will rise with a bound before settling down to normality. When dealing with the rise in the prices of the leading merchantable commodities, Mr. Beauchamp was on safe ground, and his remarks on this head are certainly worthy of attention, especially his allusion to the difficult conditions affecting those with fixed incomes, owing to the depreciated purchasing power of the sovereign. Even so, there is scarcely any evidence of any pinch being felt, nor any curtailment of pleasure. If, however, we look at the position in Russia, a vastly different picture is presented, for, instead of £lO being the equivalent of 95 roubles, it is now equal to 365 roubles, while the note circulation has risen from 700 million roubles to sixty thousand million roubles and is still I'ising. It is in connection with after-war conditions that Mr. Beauchamp devoted a considerable portion of his address, and he maintained that a critical position is bound to exist after the war. He evidently does not recognise the unfailing recuperative power of Britain and her ability to bear unprecedented taxation, while he is greatly concerned as to how the problem of adjusting the war debts of the countries concerned will be solved. He need not worry over that, nor over the bogey of conscription of wealth. The people of the Motherland and the Dominions can well bear the enormous burden, and the eco-. nomic conflict that will follow the military struggle will be a potent factor in the process of readjustment. We cannot lose sight of the fact that America is with us—is, in fact, the Allies' banker at present, and will so remain until the financial tension is over. At great length he traversed the question of making the rich pay, but it was a profitless dissertation. Even if the Empire suffered a financial collapse, its prompt rehabilitation would follow. That economy and greater industry and production will be essential goes without saying, though, much" as has been said about the urgency of strict economy, it is doubtful if any more heed will, be given thereto in the future than has been the case in the past. Mr. Beauchamp persistently proclaims that after the war the prices of our produce must fall, because our eostomers will be impoverished. Why so? The machinery in Britain now devoted to war purposes will be available for industries. The conditions of the people will never again be so depressing as before the war. The manufacturing boom wiH be a powerful factor in upraising, not in impoverishing, the workers,, and shoddy will be banned. Affairs in Britain at present are no criterion as to what they will be after the war. We may look forward to a great effort throughout the Empire to readjust financial and industrial affairs and face the new problems in a spirit of confidence and determination that will soon make up for the great inroads that the war has made.