BANK OF NEW ZEALAND.

Auckland Star, Volume XLI, Issue 142, 17 June 1910, Page 6

BANK OF NEW ZEALAND.

fIJSNIIAI, MEETING OF SHAREHOLDERS. A BRIGHT OUTLOOK. (By Telegraph.—Own Correspondent.) •WELLINGTON, This day. The annual meeting of the Bank of New Zealand was held this afternoon, Mr H. Beauchamp (chairman of directors) presiding. The Chairman, 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 but be regarded as very gratifying, and a balance-sheet which carries on its face the evJiience of a, satisfactory financial position, and reflects in almost every detail the Bank's continued prosperity and progress. A comparison of the figures with those of a year ago gives the following results: — CAPITAL. The capital of the Bank still stands at £2,000,000. THE RESERVE FUND. For the two years pTevious to 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 £ 150,000 —an amount which, under the circumstances, Tve consider quite satisfactory. The Eeserve Fund after this addition ■will stand at £800,000. With the balance proposed to be carried forward, after payment of dividend, the Reserve Fund and undivided profits will amount to upwards of £864,000.

Notes in circulation, "which stands at £919,329, show a slight decrease as compared with the previous year.

Deposits show the substantial increase of £2,140,448, the total under the heading of deposits standing at £ 14,657,650. "To larger 'Government credit balances is due the major portion of the increase, but both 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 >y £344,502 —the decrease being mainly in trills payable and of no special significance. Cable tranfers aTe 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 £355,688 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. ] may say that tie totals under this heading, plus tEe amount of bills receivable and investments in the colonies, equal 65 per cent, of the total liabilities vto the public-—a very strong financial position.- ------------' "Bills" receivable, in London and in transit, stand at £2,026,561 —an increase of £454,850. The greater volume of pTOdtice ""bills, incidental to the expansion ;in the Dominion's exports, and enhanced yalues of same, account for this. ~ Investments in the colonies stand at ; £ 1;144,745>—a slight increase on last 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 favourable ..prices obtained ior 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 generally adopted throughout the country during the financial stringency of the previous year. ASSETS REALISATION BOARD ASSETS. Further sales have been effected during the year, the movement of the accounts ibeing "shown in the following table:— At.3l/3/'O9. AtSl/S/'lO. Balances owing by purchasers £335,931 £256,8G9 Other assets unrealised 66,778 46,302 £403,T09 £333,291 No -reasonable opportunity will 'be lost of disposing of the balance of the properties. iLANDED PROPERTY AND PREMISES. During the last few years the growth | ,of the Bank's business has necessitated the erection of new' premises at a number of points, and considerable additions and alterations to existing premises. I/anded property and premises now stand at £359,790-ran increase of £13,186 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 out Melbourne ■oranch will presently be transferred ■thither. We regard the acquisition of this property as a very satisfactory transaction, and believe that the better position our office will in future occupy in Melbourne will result in an increased and more profitable business 'being transacted by the Bank in that city. PROFIT AND LOSS. After paying the £40,000 interest on Guaranteed Stock and making all necessary appropriations, including provision for the Bank's annual grant to the Provident Fund and bonus to the staff, as ■well as allocating the sum of £15,000 in reduction of Bank premises and Furniture accounts, the net profits amount to £259,385, as compared with £313,150 last year. After adding the amount brought forward from last year (£60,995), and deducting the amount of interim dividend of 3 per cent on preference and ordinary shares paid in December (£50,000), the sum available for distribution is £270.354, as against £317,248 last year. The directors now propose to- pay a further dividend of 5 per cent and a bonus of 2J per cent on ordinary shares (making 124 per cent for! the year), and a further 3 £ per cent on preference shares (making 8J for the year). The total amount distributed to shareholders for the year will therefore be £106,250. Of the balance remaining it is proposed to transfer, as already mentioned, £150,000 to the Reserve *und, and to carry forward £64,134 I In view of the considerable reduction ' m advances and discounts, and of the I

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 favourable 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. A BRIGHTER OUTLOOK. ■When addressing you a year ago, in the course of xaj remarks I said: "it would be idle to deny that a. monetary stringency is being felt in New Zealand, and it is most disconcerting to have to admit, in. view of the long period of prosperity—covering practically fifteen years—that 3, sudden drop in values of our primary products for one season only should cause euch a financial disturbance as we have been experiencing. The sudden fall in values, however, was not wholly responsible for this. If we seek other causee, we have to recognise thatthey 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 w« have instead an abundance of loanable credits. The cause which led to the stringency of a year ago was, in the main, the sudden fall in values of our primary products, a-nd the cause for the present plentitude of money is the rise in the values of those products and the larger volume of production. HvOELEASED EXPORTS. The export returns for the year ended. Slet March, 1910. compared with the figures for the previous year, show this very clearly. The figures are worth recording, and they are as follows:—

£16,597,645 21,290,436 4,602,791 *I>ecrense—£l3,eS4. The only item in the lisfc to ghow a shrinkage is timber, and the decrease is very small, amounting to only £13,654. Of the total gain of £4,092/791, wool alone accounts for £2,403,794, equal to more than 50 per cent. This gain is due both to increased output and enhanced prices, the figures approximately being as follows:—

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:—

DAIRY PRODUCE. ■Dairy produce chows an increase of over half a million sterling as compared with the previous year, and' this indue try has in recent years become a very important factor in our export trade. The values of the Jbutter and cheese exported during the past five years are instructive, and are as follows:—

In four years this industry shows an expansion of over one million sterling, but about tali the amount was gained in the last year. A fair proportion, however, was obtained by advance in values. FROZEN MEAT. At one geriod of the past year, the frozen meat trade was in a 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 proved disastrous. Values declined enormously, resulting in big lossee to nearly all sections of the trade. At the same 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 £o be seen in the higher range of values that have ruled since about October last, notwithstanding the ad , verse features referred to, the year closed iwith a substantial increase in the value of the exports in this line. Continuing the five-year comparison, we obtain the following:—

The last year's increase, it will be seen, occurs in lamb and beef. The export of grain, whole and ground, has risen from £146,751 in 1908-9 to £859,967 in 190*-10, due to the more favourable harvest. FAVOURABLE TRADE SITUATION. While the exports exhibit so considerable and satisfactory an expansion, it is equally satisfactory to note that the imports have been materially reduced, making the trade balance a distinctly favourable one. Including re-exports and specie, the total value of the exports for the past financial year amounted to £21,491,800, 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 the outside obligations for interest. etc, and also to meet any deficiency that may have arisen in the previous year. This favouratV trade situation has naturally been reflected in the banking figures for the year, and the change that has resulted may be seen in the aggregate figures of the fixed and free deposits (excluding Government), on the one hand, and the advances and discounts, on the other, for a series of years. The figures are as under:—

Last year the total deposits were less .than in the preyipus year by £1,003,693, ■whilst for the year just closed there is an increase of ' £2,070,882—an improvement that is almost astonishing and very gratifying to the whole community. The-advances and discounts, compared m the same way, show as follows: —

There is a substantial decrease in tie advances and discounts, clearly, proving that the customers of the Banks have been able to meet their past obligations to the institutions. Other favourable indications are that the note circulation, wJuch decreased in 1909, has since eipanded, whilst the returns of the Treasury for the financial year show a revenue of £9,238,261 or £237,076 more than in the previous year. A TERM Aft.KA.TU .Til EJEGOVERY. The remarkable recovery which, the foregoing facts and figures 'illustrate and emphasise lias naturally caused land, values to 'be maintained at a high level, and, in some cases, 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 mc 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, £dl 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 labour, there is a net result to the land-owner of £216, equal to £6 15/- 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, £4,050,000, made up thus: — Butter exported for year ended March 31st, 1910 £1,634,5t>i Cheese do., do., do 1,155,704 Milk, Butter and Cheese for' local consumption, say 1,257,027 * Or a total of £4,078,405 If from this an average of two-fifths be deducted, the net result is, approximately, £2,445,000, or about £4 10/ per cow, or just about one-half of the best results which I have mentioned. But we cannot take it on the favourable basis of £9 per cow, fox a recent investigation has shown thai, a large percentage of the Dairy cows of the Dominion do not average a gross return of £8. Indeed it is on record that some large herds have given a gross yield of lesa than £4 per cow. There is a wide margin of diilerence between the extremes, and it i 3 quite obvious that there is great scope for the scientific expansion of the industry. It is a question, therefore, whether the time has not arrived for the Government to take jin 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 testing 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 enhancing the prico of dairy land. The rise in the prices of our dairy products is, of course, mainly responsible for the higher land values in dairying districts. I have 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 piice paid to the farmer for his butter-fat, the basis on which all milk is paid for:— Per lb. of Butter-fat d. Season ended J tine, 1598 7.71 „ „ „ ISO) B.S „ „ „ 2000 10.18 1901...... 0. 1902 9.95 „ „ „ 1903 11.4 „ „ 1004 5.2 „ „ lOOT) 0.3 „ „ „ 1006 12. „ lfiO7 12.8 „ „ „ 1003 12. For the five years ended June, 1008, the average price works out at 10.84 J. per lb. of butter-fat, and for the ten years to .Tune, 1908, the average is 10.25 d. J per lb. The lowest price paid in the ten years to 190S was 8.2 d. in 1904, and the highest was 12.Sd. in 1907 —a margin of difference amounting to 4.6 d. per lb. It is true that while the. price of all farm products for the past half 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 always present the danger of a relapse, and it is quite 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 331-3 per cent. Such a decline would cause very serjous trouble to farmers who have paid .liigh prices ior dairy land, and who have not brought their herds tip to the highest possible standard of productivity. The question of the imediate 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. CHEAP MQFEY AM) CHEAP A year ago I said, " What we want In New Zealand to-day more than cheap money is cheap land," and I am canstrained to repeat that. It is cheap land that is attracting immigration to other countries, and if we.are to secure an increase of papulation by immigration we must be able to fjffer to the newcomer some advantages. Notwithstanding the severity of the Canadian climate and the " many drawbacks to farming there, the people are flocking to that Dominionj 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 1 will not pursue this subject further, as 1 dealt with it to some extent in my re-mai-fcs lasrt year.

As you are the Bank of England rate (reduced to 35 per cent on 2nd in st., and to $ per cent on Gtl) idem) rvap advanced to 4 per cent Jμ inid-March, a movement that inaybe sftid to be

lax, because it is about 32. years since a similar movement r was recorded. : 'it 13 usual to see'the'bank rate reduced in the first month of the New Year; and to reach its lowest point in June. . The cause 6f the advance was apparently the ■ heavy borrowing on the part of the British Government and the demand for gold froni foreign countries. However, the undertone of the money market has been cheerful all through, the Stock Exchanges have been keeping busy, the capital applications have been on a large scale, whilst British trade shows that there is a decided improvement in the industrial ation, and these, are.f actors 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 Dresdner Bank, which states: fThe first two -months of ■ 1910 have ushered in a somewhat quieter state of business, and it is probable that international commerce will continue to exhibit a certain amount of reserve until the economic conditions and measures of domestic policy, both in the United States of America and Great Britain, shail have settled down. If, however, as may be assumed, the world is spared political complications of a serious nature, it seems probable that we are on the threshold of a prolonged period of easy money leading up to a further manifestation of the spirit of enterprise which will affect riot only trade and industry in general, but also- the building trade, which has for so long been dormant. Tho 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 a generally pronounced upward movement of prices on our Boursesj we have no reason to doubt that the capital available in banking business will find suitable outlet for lucrative employment." CONFIDENCE AND ENTERPRISE. In New Zealand to-day there abundance of loanable credit, and yet, I am bound to say, there is a feeling 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 i% however, wanting. To what this unsatisfactory state of things is to be attributed is a matter for speculation and conjecture. Politics are. of course, outside the province of nn 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 the 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 me give you a short extract from the speech of the vice-president of the Bank of Montreal to the shareholders at the last annual meeting on December C, 1900. He said: "The most important change from last year in tho statement submitted to you is the unusually large increase in deposits, amounting to thirtysix million dollars. Part of it is temporary pending large payments in connection with special transactions; part is the natural increase from depositors as a result of the presperous 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 are realised, deposits from this last source may be still further enlarged. It is very important, therefore, that nothing should be done in Canada by injudicious legislation, the exploitation of doubtful enterprises, or otherwise, to stop this flow of capital." These remarks might very appropriately bo incorporated in this speech as equally' applicable to the Dominion of New Zealand, and with that observation I pass from the subject.

DIRECTORS AND STAFF. As most of you are aware, Mr. William Milne and I were re-appointed by the Government directors of the Bank for a further term of two y-eaTs as from Ist April last. In 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. James B. Reid, 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 caTe and attention devoted to the Bank's business by the London Board of Directors.

Our general manager, Mx. William Cullender, 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 nest. Meantime, his duties are 'being performed, to our entire satisfaction, by Mr. A. E. Mills—one of our senior inspectors—who possesses a wide and intimate knowledge of the ramifications of the Bank in all it's 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 has 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 the eame level as that of last year, we ought to be in position to show in our next balance-sheet the Reserve Fund and undivided profits at not less than £1,000,----000. This, in my opinion, would justify the directors in recommending that such an important event as the Bank's jubilee and the creation of so substantial a Reserve Fund should be signalised by the payment' of a slightly .increased dividend or bonus, say fo the extent of 2 J per cent. This indication will, I truet, inspire you with hope - an?, confidence as to the future.

I now formally move the adoption of the report and -balance-sheet. If this resolution be affirmed, the dividend and bonus proposed—namely 3 J per cent on preference shares, making per cent for the year, and 7i per cent on ordinary shares, equal to 12| per cent fox the same period, will be payable in Wellington, -on Monday, 20th instant, and at branches on receipt of advice.

Year ended 31st March: 19G0. 1910. Increase. £ £ , f Wool 5,537,861 7.941,635 2,403,794 Sheepskins .. 527,710 703,180 175,470 Frozen meat. 3,802,723 3,4S5,35C 122,531 Dairy produce 2,287,654 2,S20,5CS 5»2,»11 Gold 1,042,968 1,!K)2,1N> 40,221 TaUow 604,646 337,6!M Kauri gum .. 444,K(X) 540.720 96,420 Hemp 310,304 373,145 62,781 Timber 3Cfi,52i sr>2.S40 • Grain 146,751 S50.067 713,216 Other X.Z. produce 1,143,827 1,556,261 412,434

Total Averase Value per bale. atch Slst Bales. £ £ >10 524.652 7,011,655 15 •09 486,141 5,537.861 112-5 Increase . 33,511 £2,403,704 £3 3-5

[arch 31. lbs. 10W3 144,145,109 1007 1C5,227.62S 1O0S 157.051,S->4 1909 170,674,074 1810 204,388,834 £ 0,028,002 7,529,188 6,033,436 5,837,861 7,941,655

Batter. March SL £ •190G 1,443,284 1C07 1,522,113 190S 1,3&S,393 1SO0 .... 1,422,108 1010 1,6S4,S<31 Cheese. £ 2C5.0S4 449,676 702,318 865,450 1,185,701 Total. £ 1,708,36.' 1,971,7S! 2,130,71: 2,287,652,820,56

Beer. March 31. £ 1906 181,519 1307 380,984 1908 420,205 1909 .... 455,012 1810 540,392 Mutton. £ 1,094,107 1,345,460 1,230,431 1,208.590 1,042,727 Larnb. £ 1,158,531 1,430,122 1,457,373 1,617,034 1,803,610

March. 31. Free Fixed Total Deposits. Deposits. Deposit?. £ £ £ 1SOS 0,712,019 9,781,160 19,603,179 HOOT • 11,343,58B 3,700,511 21,0*1.003 lppS .... 11,S:«,S7G 0,.553,f»i 21.0SS.573 ilSOO 10,100,033 20,034,850 1910 .... ll,5So,4l» 10.570,352 22,155 762

March 31st, W06 1007 l<108 1900 1910 Advances. £ 13,001,822 15,551,547 18,542,310 1S,1S6,9O9 16,17S,12S Discounts. £ 2.143,483 2,00a,80S 2,095, im 2,132,562 1,S15,317 Total. £. 16,135,305 17,554;S55 20,638,105 20,310,471 17,093,445