The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. FRIDAY, JUNE 15, 1923. THE BANK OF NEW ZEALAND.

Auckland Star, Volume LIV, Issue 141, 15 June 1923, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

FRIDAY, JUNE 15, 1923. THE BANK OF NEW ZEALAND.

For the eaute that Jacks assistance, For the wrong that needs resistance* For the future in the distance, And the good that we can do.

Tho speech of Sir George Elliot ; chairman of the Bank of New Zealand, at the , annual meeting held in Wellington toj day, explains the general scope of the bank's operations and tho financial results disclosed in the balance-sheet, which has already been published. The outstanding figures set out in that statement may be briefly summarised. The . net profits are £128,404 less than those of last year, which were again £145,000 less than in 1920-21. The decreased volume of trade is reflected in hank returns aB in other enterprises. There has also been a decrease in revenue \ arising from a reduction in tho interest charged on overdrafts and in tho earnings of the bank's funds in London. The biflianco brought forward from last year was, however, large, approximately equivalent to the dividend for tho year. It would appear that a strong carry-forward has been made a feature of the bank's policy; if that be so, Mr. Buckloton may well bo congra- > tulated on the adoption of a sound principle. The balance in London shows a largo increase, owing to tho big trade balance in favour of the Dominion. . The increase noticeable in "bills receivable," is, of course, due to tho revival ' of imports, and points to a very profit- • able part of tho bank's business. The deposits have risen from £28,000,00 C . to £30,000,000. Tho advances have fallen from £23,000,000 to £17,000,000. This is attributable chiefly to the final clearing up of the heavy advances made three years ago to meet the over-importation which followed . the close of tho war, and banking Is now on a sound basis. The increased investments in Australian Government securities and municipal bonds is probably a measure adopted to balance exchanges. The rates and taxes are at i a much lower figure than last year, hut are still nearly as much as the amount paid in dividends. Tho Government hold more than twofifths of the capital, on which 4 per cent is paid on half a million of guaranteed 6tock, and-10 per cent on £1,125,000 preference stock. Ordinary shareholders are receiving 13J per cent. After the payment of these dividends £150,000 is added to reserves. There are good grounds for satisfaction in the strong position held by our leading bank, and the results disclosed, in view of the severe commercial crisis through which > tho Dominion has passed, afford evidence of wise and careful administration. There is no doubts that the assistance given by the Bank of New Zealand towards the development of our primary industries has been a material factor in restoring prosperity. The chairman stated that of the bank's advances on the 31st March ten millions were to - customers engaged in agricultural and pastoral industries, and that practically the„whole of the bank's bad debts had ' been incurred on such advances. » Sir George Elliot deals fully with tho subject of note issues and shows that not only is the resumption of gold currency in the near future most unlikely, owing to the existing world conditions, but also that it would involve a loss to the Government of £150,000 a year, which . is now payablo under tho direct tax of 3 per cent on note circulation, and an additional assessment for income tax. Sir George contests the "assertion which has beer, made that increased note circulation in New Zealand has contributed to the inflation of prices, and points out what is obviously correct, that higher wages and costs generally necessarily involve an expansion in the currency. The chairman's remarks on agricultural banks, co-operative companies, ana land values deserve very careful consideration, and will no doubt give rise to a good deal of discussion. There will be ' general agreement with his opinion that the moratoriums on land and on deposits should on no account be further extended. We believe that very great mischief has been wrought by the long continuance of these measures in the past and that the situation must now be squarely faced. We do not think that it is the duty of the Government to come to the rescue of mortgagees who have made advances . unwisely upon inflated land values. The interests of borroweV and lender are so closely bound together that equitable adjustments will doubtless be made in a 1 majority of cases when artificial restraints have been removed. The fact that money lent on mortgage is almost wholly due to residents in the Dominion is ah important factor in contributing to a settlement of this question without any serious financial disturbance. From time to time the question of a State Bank is raised. The chairman dealt with this twelve months since, and had . no trouble in proving that the Bank of New Zealand showed much better results . than the State Bank of Australia. We are at one with him; it is undesirable that political and financial power should be in the same hands. For that reason l the bank should scrupulously avoid any • policy that is likely to revive the demand | for a State Bank. We believe the directors and General Manager are alive to this. They have no doubt made the stability of the bank and the security of the large Government interests in that institution a prime consideration, and in this respect their eminently successful efforts are worthy of all praise; but we may suggest that, as conditions are now fairly stable, the management might follow the example of the Prime Minister ) in relation to taxation and review the , whole field of operations with a view to ! discovering whether there are any oauses ■ of. irritation or dissatisfaction among ' customers and the public which might be •remedied. The chairman has answered

a good deal of the current criticism by his remarks on the aid given to rural industries involving considerable losses to the bank, and his statement that 56 per cent of the bank's advances were for amounts of £300 or under should go a long way towards satisfying the most exacting of critics. There is a certain frankness about the chairman's extended general survey and discussion of the bank's operations which indicates a recognition of the fact that this institution has a much more important public ~ status than is usually granted to any ordinary financial joint stock company — _ that is, in fact, an institution for the ™ administration of which in the public |_ interest the Government has made itself largely responsible by its investments of capital and its direct influence over the management, c