BANK OF NEW ZEALAND.

Press, Volume LII, Issue 15613, 10 June 1916, Page 13

BANK OF NEW ZEALAND.

ANNUAL MEETING

■ CM AI UMAX'S A DDK ESS. ; EFFECTS OF THE WAR ON NEW j ZEALAND. | "WELLINGTON, June 0. ■ The ordinary general meeting of vne proprietors of the Bank of New Zealand was held at tho head office. Wellington,. to-day. Mr H. Bcauchanip, Chairman of Director, presided. j The chairman, after reviewing tho figures in the balance-sheet (which has already been publif->, touched jn various matters of interest, mainly ;n reference to the effect of the war on • banking and trade. . DEPRECI AT JO X IN INVESTMENTS.

; Tn my address last year," he .said, *'[ stated that fuil provision had been made for all depreciation in London investments, on the basis of market values at .'slst, March, 1915. The .second British war loan, at 4V per cent, (yielding a return of about one-half per cent, more than the earlier loan) wa-s issued in June, 1915. and is now quoted at a discount. The rates on short-dated British Government securities hare also increased; a year ago .six months Treasury Rills yielded £3 12s Cd per cent, per annum—at 31st March last the yield was five per cent, per annum. In view of this increase in the interest- return, the market values of all gilt-edged securities have further declined from last year's values, and considerable provision nas again had to be made ■by the Bank for depreciation on its investments at 31st March last. In this respect, hewever, our experience is only that of all other financial institutions, including the leading English banks, that have funds invested in such securities. The bank has writ-ten down the whole of its London investments to the market prices actually ruling there oil vlst March last. PROFIT AND LOS 6. "After paying intorest on guaranteed stock and making all necessary appropriations, including provision 'for the bank's annual grant to the Provident Fund as "well as a bonus to the staff, and the allocation of £50,000 in reduction of bank premises and furniture accounts, the net profits for the year amount to £285,800 as compared with £319,48(5 at .'ll-st March, 1015. Adding tho amount brought forward from last year (£57,170) and deducting tho amount of interim dividend at six per cent, paid in December. (£104,297), the sum available for distribution is £238,074. Tho directors now propose to pay a further dividend of six per ecnt- anil a bonus of three per cent, on ordinary and R preference shares (making 15 per cent, for the year), and a further 4 per cent, on A preference shares (making 10 per cent, for the year). The distribution to shareholders will therefore amount to £230,507 for the year. Of the balancc remaining, it is 'proposed to transfer £50,000 to the reserve fund, and to carry forward £5(5,404.

BOARD OF DIRECTORS. ''The Government nominees retiring by rotatiop this year were Messrs R. W. Kane and "William Rcecc. "Mr Kane was nofc re-apnointed, and accordingly' retired as at ~ 151 st March last. Inhisplaccive have Mr D. J. .Nathan, who has already had cxpericnco on the Board as one of the Government nomineo directors. 1 take the opportunity; to congratulato Mr Nathan upon his re-appointment, and also to cxprtiss the Board's appreciation of the services rendered by Air Kane during his term of office. Being an old and experienced hanker, his knowledge and judgment have been of the greatest assistance and value, and will he greatly missed at the Board's deliberations."

, -After reference to the members of the staff who have left for tho Front and to .staff matters generally, Mr Beauchamp turned to tho Avar, and in tAS -'°° urso of his remarks, said: How far weak and vacillating statesmanship lias contributed to tho prolongation of hostilities will never be known. It is to be feared, however, that a heavy responsibility rests at its floor. It is little short of humiliating to read of the Cabinet crises, which are constantly recurring, over ono subject or another. Such bickerings aro most unpatriotic, and should bo resolutely repressed in thfe time of tho Empire s danger. Politicians should unite to give effect to tho unanimous determination of tho Empire to win tho 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. It involves tho destruction of capital and material, and tho misuse of energy and power. It is tho economic aspect of the war that interests us most, and the amount of capital that is being dissipated in the present conflict is to bo reckoned in thousands of millions. The 'Economist' (London) recently presented a table showing tho cost of tho wa r to the European countries, together with

tho addition to their respective debts, and tho interest- per annum involved. The figures are an estimate to March ;.Ust. 1016. and may bo accepted as flpproxiruatelv corrcct. Thev arc:—

Diroet coat Addition to Interest oi tki v.-ar. Xatior.al debt, per ajvrn. £ £ £ Britlin 1 .550,000.00.0 I,3SB.OUUXW G3.000.000 France .. 1.653.0C0.0it3 1.000.0J0.W0 55.C5W.000 n-.n-eia .. 1.125.000.000 1,500x00,0 v> t5.00c.000 I;H!V .. ."ifiO.OCO.OOO 4(10.000,000 iO.OOO.CO) Bebjhxw \ :-;o.039.000 320,000,00') C,000,000 ac i_ 1 r, 0.000,003 IIW.GOJXOO G.000.C03 Kn'.catc >.2!0.000.000 j. tCO,OX>.O£N) -271,000,050 Germany 2.K0.0G0.000 2.100.C00.0C0 103.000,000 Austria1.1 ,".0,00.1/O) Go.Poo.otVt Tnrl:?y 110.000.1XX1 1 jO.nOP.OOO 0.CG0.000 Bulgaria 30.C00.0C0 2.000.000 Aliianco 3.370.000.000 0J30.003.000 1?2.000.000 A" eu-.s .. s-'.i50.000.000 S.tjo.ooe.ooi) 453.000.0C0 In tho above figures, no allowance is made for the war debts contracted by the British Overseas Dominions, by Japan, and Portugal, or for tho expenditure necessitated by the war in the ease of neutral countries. Holland, Switzerland, Greece, and I'oumania have mobilised thc-ir forces and are eu a war footing; and their expenses, which they can ill aiTcrd. would add a further considerable, sum to the total. Hut the actual cost of the war is not tho only financial calamity to be reckoned with. \Ye 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. Kast Prussia, Poland. Gal;eia. and Serbia. thi? sinking of ships and thoiv cargoes; the deerca.-v in etoc-ks of fowl, 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; tho cost of pensions; the loss of human capital, as measured bv the killed and permanently disabled—all these must be included in the reckoning. l T p to the end of last year, the numbers killed, died from disease, and permanently incapacitated for the ten countries I have named, are assessed at 3,980.000; and the 10.-s of human capital at £1,585.000,000. And' the war i.-J not over, nor is the end in sight. "In spite ol the fact that liritain ha.-: to bear tho heaviest financial burden of all the Allies, ti>a value of the British pound sterling in the various markets of tho world stands relatively higher than the standard money of any other belligerent. We may well ba proud of the achievements of British bankers and financiers. TRADE ACTIVITY. "With tho enormous expenditure on war goods and war services, it is not surprising that there is considerable, trade activity and much prosperity the work! orer. Even in Britain the working classes are fully employed and are. receiving extraordinarily high wares, and. if reports speak truly, the labouring people of the other belligerent States are in a similarly thriving condition. New Zealand has shared, to an abnormal extent, in what may bo termed "War prosperity.*-* There has been an exceptional demand for our wool, meat, and dairy produce, and prices have reached a particularly level. To realise to what extent we have profited by the Avar, it is only necesssarv to <?ivo the export and import figures of the Dominion for the last few years. I'he figures are:— War euclod Kxccss of Hurcli 31. Imix>rt3. Exports. Exports. l<ur, .. 21,308,-131 33, (05.391 3i,1.'9.9G0 101."? .. ]9.c(.\),0j7 27,465 SO3 7.(Xi0.74G mt-t .. 31.935.15-1 23,435,42S 3.G03.3T4 1013 .. 21,509,C53 2-2,013,205 1,333,577 "This improvement in the trade, of the country is also reflected in the banking deposits of the same period:— Freo. Ftxcci. Total ilarcrx 31. Deposits. Deposits. Dcpo9it3. S £ A 101G .. 13,091,940 12,182,10t 31,271,053 191. r > .. 15,966.732 30,870 507 26,829,230 19H .. 1 .1.475,771 10,554,479 24,030,250 1913 .. 13,160,530 10,420,726 23,887,256

''Advances and discounts also reflect financial case, as they have remained practically stationary. The figures should be placed on record. ''They aro as follows: — March 31. ' Discounts. Advances. Total. J <110 .. MB-TC3S 22,2-16/237 53,783,883 1315 .. 1.G34.418 2:2.106 HI 23.740,362 19H .. 2.017,107 21,649,C1S 23,GCG,739 1013 .. 1,967,351 21.026,105 22,032,150 "For tho past three years the deposits in and withdrawals from the Post Office Savings Bank were; — Kxcojs of Yt-ir. Denosits. Withdrawals. Ueposits. ' £ £ £ 1913 .. i:1.701i.037 11.294,974 2.U1.053 1914 .. 11.904,:i21 10,(503,017 I.>*Gl,3(>l 1913 .. 11,280,71)2 11,0-11,451 215,218 "The-savings last year, it will be seen, wcro very considerable. Roughly, they were equal to about £2 per head of the entire population, which is a very creditable record." AFTER THE AVAR. "Looking to the future, 1 ' Mr Beauchaiup concluded, after a discussion of tho abnormal rise in freights, "v.o may safely conclude that tae world whicii will emerge from the war will be a vory different world from that which entered it.' Permutations and changes of a far-reaching character may be expected to t&ko place. i "So far as the Dominion is concerned, wo shall be i'accci, at tne close of the war, with two questions—both vital to our interests. New Zealand is a producing country, and, by necessity, a J>orr<nving ono, and tho state of the produce markets, and of the money market, will have considerable bearing on our future prosperity and development. The present war is on such an enormous and unexampled scale that wo have no reliable precedents to guido us in forecasting post-war conditions, and, as far as the produce markets aro concerned, it is particularly difficult to make assertions with confidence. Europe will almost certainlv be compelled to economise—Great Britain quite as much as the other belligerents. Now. assuming the present consumers of oar products will be forced to economise. it is obvious that- they will ho unable to pay high prices for tho foodstuffs we -send them. The values | of all our products, therefore, must j naturally be expected to fall, and to fall perhaps rather heavily, from those .•urrent 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 that the predicts 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. It seems, therefore, that should wc be facad with any set-back after tho termination of hostilities, it ■mil be but of a temporary character, and we may therefore look hopefully to tho future. "As regards the prospects of the money market, there are grounds for spealang with more confidence. So much capital will be wanted in Europe that there will be very little to snare 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 rates, the British Government might find it necessary to continue the Dresent restrictions on capital issues. To-day. as you are aware, no loan or issue of shares can be placed on the London market, without the sanction of the Treasury: and oven in the case cf maturing bonds a nd debentures, the permission of the Treasury is needed to arrange a renewal, although both lender and borrower a,rc willing. There is nothing to

prevent, this embargo continuing f«v." some time after tho war hr-s terminated. • "There are dknuictnig features ia the possible post-war conditions, and for that reason it- is of the utmost importance. that the people of New Zealand, while they have the opportunity, should roeognise the true value of economy. The more we save, the better we shall be able to assist the Empiro now and to face the un/avourai>lc conditions that must, I fear, inevitably follow tho declaration of peace. This is, obviously, the only prudent eouvsc to adopt, and tho need,' therefore, for economy cannot be too strongly urged unon every class of the community." The chairman then formally moved the adoption of the report and bahuicosheci.

Mr William Wn'.son. in reeondiag the motion. .vairl: ; 'lt is po.--.iblc that, without full explanation, sbareho'd.'ts may imagine that tho pro rib amounting to £3.*7.093. when coinnai'od wi;h £3f13,160 'n the previous year, indicate a falling-eh* in ihe earning power of the Bank, aud I therefore take this opportunity t<> n?sur,- slyreholders that t-he ordinary earning power has increased in quite a saiisfjctoiy measure. The shortage in the profits sr.own is due to tlie provision for depre-iation in investment i-ecuritie-. mentioned hy the chairman in his speed): indeed, the provision was mucii nvive than tho shortage, but tliii must not be taken to mean an ultimate los.-. for the interest, receivable ou tho securities remains the fame, as if nrV depreciation had occurred, and values will doubtless recover after the war. { may quote the following appropriation/; for t:;e same purpose made by leading banks in Great Britain and lio'land in or for the year 1915: Barclay and Co.. Ltd., C'■'(),COO: London Cirv and Midland Hank, Ltd.. £612.580: London Countv and Westminster Rank, Ltd.. i4i"2.!lL': Lloyds Rank, Ltd., £-110.000; Rank el' Ireland. .C 390,000; Rank of Scotland, £270,000." Air Watson added that next March, the period for which he was elected one of their representatives on the jj.mrd would expire, and he would offer himself for reelection at t'ae. December meeting.