BANK OF NEW ZEALAND.

Press, Volume LII, Issue 15769, 9 December 1916, Page 11

BANK OF NEW ZEALAND.

HALF-YEARLY MEETING, THE CHAIRMAN'S ADDRESS. At the half-yearly meeting of the Bank of New Zealand, field at tho head office in "Wellington yesterday, the chairman of directors, Mr Harold Bcauchanip, said tho business was limited to tho election of a proprietor as one of the representatives on the Board, and to tho declaration of an interim dividend. There were no accounts to submit and review. Tho chairman referred in feeling terms to the death of Mr Martin Kennedy, who for tho last 22 years had been a constant attendant at the meetings, and whose loss made a sensible gap in their assembly. Shareholders had lost an efficient representative. A man of ability and foresight, the late M r Kennedy brought the force of his capacity and wide business experience upon the business that came before the Board. The fact that he was consistently re-elected unopposed showed that ho had enjoyed the confidence of his fellow-shareholders. ADDITIONS TO THE BOARD. Owing to tho death of Mr Kennedy while he (tho chairman) wa s absent, the Board was reduced in number from six to four—which constitutes a quorum. At the instance of the remaining shareholders' representative, Mr Wm, Watson, it was suggested that the vacancy should be filled by the appointment of Mr 11. W. Kane, who had previously acted as one of the Government nominees, a position which he vacated only last March. Tho suggestion was adopted as Mr K.ane was well-known to the Board, which had a satisfactory opinion of his business qualifications. It was, moreover, impracticable to hold the election of a successor to the late Mr Kennedy. To enable shareholders to vote the time for tho election had been deferred until the Juno meeting. In the xneantime Mr Kane had announced his intention of being a candidate. During the chairman's absence the duties'of chairman had been most efficiently performed by Mr J. H. Upton. THE FINANCIAL POSITION. The chairman went on to review the leading features of the financial and industrial position. Referring to the military situation, he said it might be described as an improved and improving one. A review of what has been achieved in the campaign of last summer and autumn fills us, he continued, with hope for the future. _ We look forward with sanguine anticipation to the opening of next year's spring offensive, in the fervent hope that the operations of 1917 will be effective in crowning the Allied arms with victory and bringing the war to a swift termination. From a reliable source we hear that, in less than six months hence, Great Britain's industries and resources will be mobilised to such an extent, that she will be able to supply all her own requirements in respect to ammunition and big guns, and largely assist her Allies. One of what may be called the wonders of the war has been the marvellous ease with which, so far, the enormous financial requirements for military and other purposes of Great Britain and her Allies have been met, whilst at the same time London has maintained its traditional reputation as a free gold market. This amazing achievement was very tersely and forcefullv commented upon in the "Statist" (one of the leading London financial journals) of September 23rd last, from which I take the liberty of quoting, i as follows:— I "If at the beginning of the conflict ! any one had been told that Great Bri- ! tain was. to be called upon for. two or j three years—and perhaps for a longer | period—to finance the whole of its own imports and those of its Allies, to finance them moreover, with commodities at record high prices, and at a moment when a great portion of tho industrial population was mobilised for war, he might well have been excused for wondering whether, under such conditions, it would be possible for England to maintain its position as the great free gold market of the world. And vet the wonderful thing has happened. Tho demands upon Great , Britain have been even greater than ' could have been imagined in the wildest dreams, for during the past two i years our adverse trade balance must have amounted to many hundreds of j millions of pounds. In spite of that ! fact, however, we find that whereas, i immediately on the firing of the first ' shot, Germany shut down on her gold ! and na s ever since hoarded it jealously, Great Britain from the start, and the : other Allies at a later period, have utilised their enormous public and secret gold reserves as such reserves ; always should be utilised in times of | emergency. So far from shutting I down upon our own gold supplies, we j ! must have sent abroad sinco the war ! began very little short of £250,000,000, ! most of which has come from our own ; stores (including the output from South Africa), the amount contributed b.y the Allies, though useful and timclv, being, of course, moderate when compared with the huge size of the credits granted by us. And yet, in ' spite of tho freedom with which this ; «old has been outpoured, our central ' stock of the metal is some £15,000.000 i greater than it was previous to the war, while, in addition, nearly £30,000,000 of gold has, of course, been set aside on account of the Note Curicncv Reserve." The "central stocks" referred to are, of course, the stocks of the Bank of England. These on the 22nd July, 1914, amounted to ... £35,564,000 On Ist November last they stood at ... ... 54,426.000 An increase of ...£15,862,000 In addition to the stocks of the Bank of England, considerable gold reserves are held by the large British banks. This position must in the circumstances be regarded as satisfactory and indicative of sound finance and strong credit. The Bank of England rate was ad-

vanced from o to 6 per cent, on the si Kith Julv la.-t. and the following day s< the rates'for British Treasury bills were h advanced to:— ?' 3 months ... 5} per cent. n 6 months ... .^percent. 12 months ... <j percent. £ At the end of September the rate for 0 Treasury bills was fixed at. 5J- per cent. ~ for all currencies, and a new issue of b Exchequer bonds was announced carry- & inn- interest at 6 per cent, and matur- r ing on 16th February, 1920. The de- a sign of this arrangement was doubtless p to divert money from the short-dated y Treasury bills (of which an enormous s amount—some £1.040.000,000— were current) to the longer (though still t j short) term Exchequer bond. 'Ihe Y effect of the new Exchequer bond issue T on a 6 per cent, basis was very de- t pressing upon all investment- stocks, t and a- permanent lowering of quota- r tions on the exchanges took place. v The British Government appears to t prefer to finance meantime on short- j dated bonds, and is apparently desir- [ cus of postponing the funding of its t floating liabilities in the expectation i that some decided change in the war r situation in favour of the Allies will | r afford the opportunity to float a loan j on more favourable terms than would t at the present time be obtainable. Tho ; amount thus outstanding on these I short-dated obligations at the present 1 time exceeds considerably £1,000,000,- t 000, or, if Exchequer bonds be included i ,v short-dated obligations, £1,500,000,- i 000. The total British Government bor- i rowings since the commencement of the j war amounted, at 16th September last, j to £2,405.269,000. and as the expendi- c ture is at the rate of about five and < a quarter millions per diem, the debt J will have since been largely increased. 1 And still the outlay goes on. Britain i is, however, becoming more self-reliant 1 as time passes, and is consequently ; spending less outside and moro within : her own borders. This means, of course, that while the indebtedness ot i tho State as a collective unit is enor- : mously increased, the wealth of the in- j dividuals constituting the State in < which the borrowed money is expended i id also largely increased. The well- , being of the individuals comprising the State is promoted, though the State itself may be driven to the verge of financial extremity. Britain, however, in the meantime is in no such extremity. Her Chancellor of the Exchequer, in an announcement on the sub- ; ject a short time ago. stated that the country's finances were absolutely sound, and that, assuming tho war continued until 31st March next, the existing taxation would cover all the necessarv peace expenditure, provide , all tho "interest on the National Debt , and a sinking fund which would redeem the whole debt in forty years, and, moreover, give a surplus which would admit of the abolition of the exceat. profits tax, besides reduction in other taxes. Surely a country wth such a record might cheerfully face a future of darker portent than that at present in view. As an American writer has remarked: — "When the history of the war comes to bo written, it will bo found that the wealth of Great Britain and the genius of her financial men have been predominant factors in defeating the aims of Germany. Who can doubt that just as tho genius and resources of Great; Britain have proved equal to the task of financing this war, so they will prove equal to the task of reconstructing the national life on tho conclusion of tho war." Whilst the demands for munition supplies from the United States of .America are now greatly reduced, considerable importations from America, both of munitions and merchandise, are .still going on to Britain and British Dominions, and an adverse state of the American exchange still continues. By careful manipulation, however, it has been found possible to prevent the violent fluctuation in tho exchange rate which marked tho autumn of 1915, and for practically the whole of the current vear th© rate has been fairly steady, fluctuating between 4.77 dollars and 4.76 i dollars, or a discount of roughly £2 per £100. The war has effected a tremendous change in the financial position of the United States relatively to the rest of the world. America has, for the time being, become a lendin 2 nation, and having regard to tho wonderful expansion of her exports to Great Britain and other countries, one does not wonder at the amazing growth of her wealth. Note these figures. —In the month of September, American exports made a new record, when £102,570,000 worth of goods were sent abroad. Tho exports were greater than ever before in one month, and exceeded tho previous record made last August by about £600,000. In announcing these statistics, the Department of Com- ' merce pointed out that American export trade was approaching the £1,000,000,000 mark; the total of exports for tho twelve months ended 30th September was £994,390,000, exceeding 1 that for the -same period the year before by £358,900. The net inward gold movement aggregated £17,143,000 for ' September, and £91,207,000 for tho ' vear ended 30th September. Last year ' the figures were £8,000,000 and ' £41,089,000 respectively, the net inward gold movement having doubled in one year. ' Gold has been poured into America • to such an extent, .that Americans are ' now coming to regard with disfavour ' settlement of indebtedness by that i means, because shipments increase to I an abnormal and unnecessary extent their holdings of unremunerativo funds and, it is apprehended, accumulation may lead to a period of reckless specu- ! lation in an endeavour to provide em- . ployment for idle resources. America is consequently becoming i more favourably disposed towards seti tlenient by loans instead of_by cash- ■ A few months ago a loan of £50,000,U/u i known as the "collateral loan" was > arranged, it being supported, collater- • ally by deposit ot American, Canadian, I and' other securities borrowed by the i British Government from British inves- ■ tors. The British Government unders .took to pay interest on tho borrowed . securities at slightly better tha:i the ■ security rate, and to eventually return i> the securities to the owner, or, in the i alternative, pay for them at a price - agreed upon, which is better than the > market price for the time being. t There is, however, now talk of a furf ther loan without any collaterals, which t in itself indicates the growing confi- » dence of the United States in Britain's t ultimate victorious issue from the war. 1 Business on the London Stock Ex- > change is once more free of any price 5 restrictions, all remaining minimum 3 prices having been removed on 3rd July 1 lastf The New Zealand Position.—Turning t now to local concerns, I may remark 3 that in this Dominion producers conr tinue to experience a period of phenomi enal prosperity, and our staple pro-' a ducts are realising prices which, it may n be said, have never before been obtain--3 ed in the history of the country. Since ._ early in 1915. the Dominion's meat outa put has been purchased in the interest* e of the Imperial Government on a fixed a and remunerative basis us to prices, s and the arrangement has recently been ,1 renewed till the end of the war on [) somewhat more favourable terms to the c producer. A portion of the cheese outv- put for last season was also purchased a on behalf of the Home authorities, and arrangements have recently been made to similarly take over the Dominion's !, wool clip for the coming season. f Throughout the whole country an ex- > ceptionally favourable season has been J experienced, and the yield of every description of produce promises to he 0 bountiful. The area of land under crop - is somewhat restricted this year owing, 0 to some extent, to the difficulty that k is being experienced in obtaining the s necessary labour to cultivate the land and harvest the crops and also, in a s measure, to the relatively higher prices ~ ranging for meat and wool. ■• It is to be feared that the high yield 1- for meat is inducing prodigality in the

a ugh tor of stoc-k. and there is rca- J in to apprehend that our flocks and erds are heing reduced in mimbers to ich an extent that the adequate stocklg of our pasture lands will, in the ear future, become a very difficult roblem for our farmers. More espeially is this remark true in, tho case f cattle, of which class of stock a lore than ordinary number of young caste are finding their way to the laughter-house. Lambing has geneally been good for the whole country, nd this, in wrao measure, will coruensate for the excessive drain that ias been taking place upon our sheep tock. The state of trade and business hroughout the country is. on the .•hole, good. The excellent prices rhieh have been realised for the past wo years for our staple products and he farge expenditure of borrowed aoney that is in progress in connexion rith the training and equipment of iur troops for oversea service, have I >laeed the people generally in an easy >osition in regard to resources, and hey are displaying the usual liberality, f nor prodigality, in the expenditure if the. abundant "funds that they have ivailable. Traders in luxuries, such as ewellcry, soft goods, etc., have been loing exceptionally well. Land and igency business is fairly quiet. The >uilding trade is severely handicapped >y the shoitage of skilled labour and ,hc high prices of materials : and operations in this industry are confined nainly to necessary works. There, is little change to chronicle in lie state of the money market. Mortgages still continue to be raised and •enewed at rates averaging as a rule >J per cent, to 6 per cent., and tho jffect of the £8,000,000 local War Loan, which the Government placed on :he market in August last and which vas over-subscribed, has not apparently jeen to harden the market to any appreciable extent, at any rate in the xie.antime. Tho cost of living is steadily increasng, and the high prices to which the accessaries of life have advanced arc mposing a heavy burden on the wagesarning and small salaried classes. The government, with a view of placing a ;heek on the upward tendency of the price of butter sold for local consumption, fixed, by Order in Council, tho maximum wholesale price at which butter destined to be retailed in the Dominion should be sold; and in order to compensate manufacturers for any losses thev mav sustain through selling for the local market instead of exporting, a levy at the rate (at present) ot three farthings per pound of butterfat used, was made on all butter and cheese factories, and the issue of a licenso to export was made dependent on the payment of the levy. The principle underlying the Government s action is a verv important one both to producers and consumers, and its operation as regards butter will be watched with interest. In sympathv with the increased difhtfiiltv of living decently and respectably at the present time on small salaries, the Board recently decided to grant to the Bank's officers, a war "bonus ot 10 per cent, on all salaries, not exceeding £500 per annum, drawn by married men and bv singlo men who are burdened with"thc support of dependants. As this bonus has been back-dated to Ist April last and is to contmuo at any rate till 31st March next, it will, we hope, effect a considerable relief to the lower salaried officers of onr staff in the matter of ways and means of livelihood. I have no doubt that the Board s action will have your cordial endorsement. , ' . . Tho trade returns of the Dominion exhibit a verv satisfactory position. In each of the two complete produce years that have passed since the outbreak or the war there has been a very substantial increase in tho values of the Dominion's exports, as compared with the nrevious year. To show to what extent the Dominion has benefited by the very strong demand for its staple products. T append a table of tho. exports and imports (excluding for the two Years from October Ist, 1914, to September 30th, 1916, and alsc for the two years immediately precedinff the war. viz.: From October Ist, 1912, to September 30th, 1914:— Excess Exports. Imports. Exports 1912-3 w 23,682,416 22;&68.354 — 1913-4 — 23.759,347 21.056,384 • — 47,441,763 43,924,733 3,317,02; 1914-5 ..■ 29,710,434 19,78G,224 — 1015-6 .. 34,926,541 23,791,152 — 64,636,975 43,577,376 21,059,59! These figures show that the excess of exports over imports for the twe pre-war years was £3,517,025, and th< excess for the later period £21,059,599 Turning to the figures fo r the yeai ended September 30th last, viz.: Exports £34,926,541, imports £23,791,15* —an analysis of the export figure; shows that the increase of £5,216,107 as compared with the preceding year, i< due mainly to higher values, and nol to increased quantities. The fluctua tions in our main products are showi in the following table:— Quantity. Value. 1914-5. 1915-6. 1914-5. 1915-6. jE £ "Wool, lbs. 208,908,118 200.130,178 10,425,172 13,173,90) Frozen meat. owt. 3,368,164 3,453,340 7.238.560 7,589,791 Butter, cwt. 413,987 395,460 2.385,308 2,749,93! cwt. 792,075 970,513 ' 2,523.109 3.446,14! It will be seen that all the principa products expprted in 1915-16 exhibit ai increase in value, though both woo and butter show a shrinkage in quan tity. Imports show an increase in value foi the year of £4,004.928. This is j large increase, which in normal time: would call for more than passing com ment. but under present conditions i: is obvious that a considerable portioi of the increase is due to higher value: of the goods imported and the execu tion of belated orders. The prosperity of the country tends to encourage ex travagance in expenditure and in me thods of living, which in ordinar course results in increased imports and from that point of view it is per haps not a bad thing for the countr; tliat inward shipping facilities are ii some measure restricted. The banking returns show an emin ontly satisfactory position. The com bined deposits of the banks receive! from the public at September 30th last compared with those of Septembe 30th, 1915. were as follows:— Sep. 30,1915.5ep. 30,1915. Increas Interest bearing deposits £11,609,066 £12,978.629 £1,369,56 Non-interest . b'g deposits 17,313,863 19,620,671 0,07l ; 60 £-23.151.929 £32,599,300 £3,444,37 Government deposits show large ir creases, the consequence of the incon ing of the local loan moneys, and th large revenues resulting from th taxation imposed under the Financ Act, 1915. Note circulation shows a expansion of £1,507,146. This is nc the result of any increased activity- i the trade of the Dominion, but is o< casioned by the complete suspension < gold settlements between the banks settlements of exchanges being no made in the legal tender notes of tli settling banks. Advances also show expansion to tl extent of £1,329,059, the figures bein as follows:— Sep. 30,1515.5ep. 30.1936. Increa; Discounts .. £1,357,693 £1,428,828 £71.1-! Advances ... 21.991,222 23,249,r36 1,257,9 £23,348.905 £24,677,964 £1,329,0: New Zealand War Loan. —In Augu: last, the New Zealand Governmen' whose war requirements had previousl been financed through the British G( vernment. issued locally a war loan < £8,000,000. The bonds were for 14 c 25 years' currency, and the rate of ii terest 41 per cent, free of income ta: Applications for the loan totalle £9.558,500. of which amount the fly banks doin©- business in New Zealan subscribed Our own sul scriotion was £2.000,000. Contemporaneously with the issue ( this loan, the Government offered f<

saje at tlip various post offices \» the Dominiou war loan eertineate.s in denominations of £1 and £10. These certificates, which are payable in live year?, were offered at a discount tho discount representing compound interest on the purchase money up to date of maturity of the certificates. The prices of the £1 and £10 certificates were 16s and £S respectively. By this mean> coupons for interest are dispensed with. Each investor will draw interest in one amount when the in--, vestment falls due- No limit has been; placed upon the issue of these certificates, and sales are >till being made. L'p to loth November. £1.113.000 had ■been received from the sale of these certificates. Staff.—i Since the outbreak of war no fewer than 3(59 of the bank's officers — more than a third of the total staff — I have joined the military forces. Tho bank granted leave of absence to 329 or these, with half-pay in the case of members of the colonial staff and full par for members of the London staff, the military pay of the latter beinj!; on n lower scale than that of the colonials. The remaining -10 resigned their ■appointments in order to join the army, preferring that course rather than to wait their turn to be relieved. Of the officers on leave 1 regret to sav that -0 have lost their lives, one. is'missing, and believed to l>e wounded, and ol others have been wounded in action. As probably less than 200 of our officers have been in the firing-line, the balance being still in camp or in transit, thi> is a heavy toll, and it can be judged, that, as a soldier, the bank clerks keeps well to the fore, and takes his full share of tho fighting. You will. I am sure, join with me in extending 'heartfelt sympathy to the relatives of our gallant officers who hay© willingly given their lives in the service of King and country. The difficulty of carrying on o ur large business with a steadily weakening staff is one which is shared by practically everv employer in the country, but tho magnitude of our business makes our task proportionately heavier. We have now 200 women clerks at work, and are taking on others. An efficient bank officer, however, is the product of years of experience, and no cannot be satisfactorily replaced by inexperienced clerks. Election of Directors.—Mr William Watson is the retiring director this vear. He has given due notice that ho offers himself for re-election aud, as there is no other candidate, I have pleasure in declaring him duly elected. The death of Mr Kennedy leaves Mr Watson in the position of senior director. For over 22 years he has been continuously watching over the Bank's interests, and, having regard to his physical and mental activity, I should say that he is good for many more Years of service. I have pleasure in congratulating him upon his re-elec-tion. . Interim Dividend. —Thoresultt; of the Bank's work during the half-year ended September 30th. last have been found to be satisfactory. The profits earned justify the usual distribution. An interinTdividend of o per cent, is accordingly now declared in respect of both preference and ordinary shares. The dividend will he payable at Wellington to-morrow, 9th instant, and at branches on receipt of advice. Mr W. Watson returned thanks for his re-election to the Board of Directors. Mr 11. W. Kane, who was appointed on the death of Mr Kennedy, intimated his intention of being a candidate for re-election as a shareholders' representative at the annual meeting in June next.

SIR .TAMES MILLS ON THE WAR AND TRADE.

(rRESS ASSOCIATION" TF.L>XJRAM.) WELLINGTON, December 8. At the meeting of shareholders of the Bank of New Zealand to-day, the chairman (Mr Harold Beauchamp) welcomed Sir James Mills, a member of the London board of directors, and expressed appreciation of his services on the board at a time of crisis. Sir James Mills, in replying, said the position of the London board was an anxious one for some time before the declaration of war and for a short while afterwards, until the Imperial Government formulated its scheme for the relief of the money market. The Bank of New Zealand was in a very satisfactory position, and had affairs become worse would have been as well able to meet difficulties as older banks. Sir James went on to say that the chairman's remarks regarding the trade balance were very reassuring. He quite endorsed Mr Beauchamp's views,- that notwithstanding the present clouds, we could look forward with confidence that British staying power would bring the conclusion that we counted upon. After the war there would be a difficult position before commercial and banking institutions which would be faced with the task of recovering trade lost or scattered while their attention was occupied with the war, and wo'uld have to meet the competition of Germany and neutrals which had accumulated reserves and stocks. "We must abo look forward to our present enemies making a great bid to recover trade as soon as the seas were open to them again. It seemed clear that, notwithstanding her difficulties, Germany had been able to keen some of her industries going, and had' accumulated goods and reserves of raw materials which would be used to flood markets when peace came. To meet this situation, hotter organisation and co-opera-tion between banks and commercial men would be necessary, somewhat on the line s which had obtained with the German banks in the long years of peace. They must prepare not for. tomorrow, but for future generations, by the better education of young men in banking and commercial pursuits. "They do this in the secondary schools in Great Britain and hero._ providing that and Greek siiould take second place in their systom of education," concluded 'Sir James. A motion expressing, deep appreciation of the services of the late Mr Martin Kennedy, and regret at his death, was earned in silence. The meeting endorsed the action of the directors in appointing Mr R. "VV. 'Kane to the vacancy on" the board caused through the death of Mr Martin i Kennedy.