SIR GEORGE ELLIOT'S ADDRESS TO SHAREHOLDERS

Press, Volume LXXII, Issue 21808, 13 June 1936, Page 11

SIR GEORGE ELLIOT'S ADDRESS TO SHAREHOLDERS

\ iS anon- S r George Elliot S «j>arinf uw ; t;.e total amount I *r our cotes presei.ti-d for payment I £179.326. the amount of unpreI NMad notes at March 31 being 1 ff*** In compliance with the terms I gA* Reserve Bank of New Zealand I MX, Iff* face value of our notes I eistasdir.g on August 1 next will be 5 pwl over t 'j '• Receive Bank, j *9eposits at £35.740.430, are higher £2.541.817 than a year ago. the pmr’ part of this increase being in »t accounts. Com. Reserve Bank mIB tad deposits with bankers stand at Money at call and short Government securities and ajgg tecunlies m London, „at —an increase of £586,952. Bilk receivable in London and in trangg gbpw an increase of £799,333, ii ir.aml;- accounted for by ■ shipment.' ol worn end the llgber prices ruimg. -Near Zealand Government 5ecuri£3.297,058. show an increase of Australian Government seegritoes are less by £264.326. Advances i yd bills discounted. etc. at £8.179373. au- more by £688.642 than • year a;.. 0. I Board of Directors ‘The term <-f of Mr William Nation, one ot the two representatives tiM o:a ear. - landholders. expired ■tMarch 21 md he -was re-elected MagpMad •-> : position. Mr R. W. March 31 : >id he will again offer r e,., n The term of Mr*, cf S.r Ha-u i Beauchamp and Mr Okvtr NiC-nol-on. two of the Govawat:.- :.■< u..; !h-„- board, expired on Maren 31 *S >r Harold Be -ucharnp’s connexion «i& me iias.t bt-m an outstanding aw. ' ii- ir nee of the Governrißi: to tae oo u .. on ns reorganisation aim Sir Harold eas a director for MKthan 37 years. 15 years of which he BW chairman. Tin bank, when he tnoe assoc-ated with it. was still uafiemg severely from the depression of the nineties, and he took a promam part m guiding the institution 6«b a position of weakness to one 4 great streng’h. His reappointment te ttie board by successive governawl* indicated th ■ high esteem 'ta vtaea his abilities were beki. Ttie tNUrd has placed on recof£'Ju pmctatkm of Sir Harold's valuable •4 distinguished services to the InChßtioc over a period of so many JUKI. Hr Oliver Nicholson joined the IfUd in \ytA. and was chairman for Ui snaoci»i year ended March 31, 203 The ooard has also recorded its *»reaa c.n uf Mr Nicholson’s valuable services to the bank during his imti ot office. 1 Th* General Elections I i.'A* ,ile general elections in NovemI m but the Coalition Government I *•» overwhelmingly defeated, a large ■ wfcrity of the constituencies returnI labour members; and for the first I u: the history of New Zealand I * Ldaour Government is in office. I Government has already taken I implement by legislation its I Pisiform, and the Reserve I of New Zealand Amendment I - ” been pass'd giving to that inI JJSJ? 0 <now made a State bank) full I - ver fbe credit and currency I iLSw ® ea^an( I A Primary Products I iSS** 10 * Act has also been passed, I Government control over I mL exports, though Its I price? and marketing proI to applied at present I mm *° Produce. I °f Ibe legislation directly afI the trading banks. For instance. I ' ose from August 1 next I g .wndling of the exports of dairy I .Sz* 6 *’ Bn<: * *bould wool and- meat I 3? the Government’s guaranI -Sff Pnce and marketing scheme, the I 2** would be that the banks would I deprived of the normal I 2?#* re olonishment of their LonI ar) d would have to purchase I exchange requirements from I 2Jr* <irvc * Bank of New Zealand. I I sav that tiie Government’s V SSftt m Ihi* direction will serlI Mfect an impurlanl branch of ' I y °?4irig banks’ business, a business I ” h4 Vt developed and carried on I igw I Reserve Bank ( I legislation has made im- 1 I mpt amendments to the Reserve; I Zu i' 1 New Zealand Act. The prii SI “““■eholdmg? m the bank have H Purchased by the Government at ""iximate price ruling at the «t recent elections. The pre- j tors will continue to retain j Pg the pleasure of the Gov- ( eral-in-Council. i L given to the bank to reI control credit and currency _____ Zealand, the transfer of I gy/* 10 or from New Zealand, and I »r W irtf po * a l tJ f rnonevs that are deI p l ' an >' New ZeaI !,i to grant acI «2” lon by wav of overdraft for I •mISP?*'. 0 ! financing the purchase I of anv New' Zealand I accommodation that the I lSif a,r Krar) ' I" the Treasury has I ******* from one-half of the re- ■ >hr revenue for the I *'b»L . fu * ! amount of the re- ■ lb-' ‘ e:,; I i,! ’he amount of ■ Government securities. I of tiie Government of the I ttw-Zr. Ring Jon with an unexoired E more then three months. I «*sr Bank was previ- ■ ? ° bnlri- has been reI Reserve Bank has been II tu Ullderwri t e New | an *eiided gives the Min- ■ finance power to suspend. I or conditionally as I • tk e duty of the Reserve ■ •iS* sterling in exchange for wilder the original act. tradwere required to maintain IdOL-yttb the Reserve Bank not less than 7 per cent, liabilities and 3 per .■BePflr time liabilities. The act P° wer to the goverH9.Mnk. acting with the au|Kf *»• Minister for Finance, to percentages hut so that the KBQttired to be maintained time be less than those fbat the Government full powers indeed to » control credit and curHMr Zealand. Marketing Act I act the purpose of which l"4pttcr provision for the

Kr<-.:n Our Own Correspondent.) WELLINGTON, June 12. A uirvey ol the activities of the bank, and of the measure of jaaaatria! recovery in New Zealand during the last year, was jjjMie by Sir George Elliot, chairman of directors of the Bank of Sew Zealand, in his address to shareholders at the annual meeting to-day. Sir George predicted that certain of the new Otfenunent legislation would reduce the earning capacity of the trading hanks.

Trading and Banking Figures

i marketing of dairy produce and other primary products so as to ensure for producers an adequate remuneration for the services rendered by them to | c ? m punity.’ The preamble'states [ tnat it is considered essential in the public interest that producers ,of primary products should, as far as possible, i be protected from the effect of fluctuations in the market prices thereof, and it is thought that the most effective and appropriate way of affording such protection, so far as relates to primary products intended for export, is to provide that the • Governntent shall acquire the ownership of such products at prices to be fixed and promulgated from time to time. “A department of state, called the Primary Products. Marketing Department, under control of the ‘ Minister for Marketing, is to he established to administer the act. The principal functions of the department" are to make all necessary arrangements with respect to;—(a) The acquisition by the Crown of any primary products in aci cordance with this act or in accordance with any other lawful authority that may hereafter be conferred, (b) The marketing, in New Zealand or overseas, of primary products, whether or not such products have been acquired on behalf of the Crown. “The act provides that no contract for the carriage by sea of any primary products intended for export shall be made save by the Minister or in conformity with conditions approved by the Minister. “Dairy produce will be the first of New Zealand’s primary products to be marketed under the new act. After August 1 next all dairy produce intended for shipment will, as soon as placed on board any ship for export, become the property of the Crown, which will make payment therefor at prices fixed from time to time by order-in-council. To enable these payments to be made, an overdraft will be granted by the Reserve Bank on an account to be styled ‘The Dairy Industry Account.’ - Proceeds of the produce. as it is sold, will be credited to this account, and if the amount realised is less than the guaranteed prices paid to the producers, the loss will be borne by the Government. “The act provides that for produce exported on or before July 31, 1937, the price shall be fixed after taking into consideration the prices received in New Zealand during a period of from eight to 10 years before July 31, 1933. After July 31 1937, several other factors nre to be taken into consideration |MSftxing£ricte: • ' "Provision is made in the act that the Minister may control the marketing and fix prices of dairy produce intended for consumption within New Zealand.

“The trade figures disclose a sound position. The values of both exports and imports are higher by approximately £4,000;000 sterling, the excess of exports, £9,828,000 sterling, being sufficient to meet all oversea interest commitments. The exports and imports (in sterling) for the last five years are as follows:

“The average total trading bank deposits for the March quarter amounted to £05,599,000. an increase of approximately £4,500,000 as compared with the March quarter of the previous year. Free deposits account- for £3,229,000 of this increase. Advances show an increase of £2,028,000 for the same period. The figures for the last five years are:-

“The total trading banks’ balances with the Reserve Bank at March 30 amounted to £8,937,618, or say £5.600.000 in excess of the statutory I balance required to be deposited. In addition, they held in London assets in connexion with their New Zealand business aggregating the sum of £14,143,369 (N.Z.). The trading banks are therefore in a position to materially extend their lending operations in New Zealand. “The London funds of the Reserve Bank of New Zealand and the funds of the trading banks held in London relative to their New Zealand business, together amount to more than £3B millions in New Zealand currency—a position of considerable strength. Dairy Produce “The prices received for the season’s production of butter and cheese, although slightly in advance of those of the previous year, have been again disappointing to dairy farmers. The average prices received this year are approximately 92s per cwt for butter and 51s per cwt for cheese, against 89s and 48s respectively last year. “The peak price, 128 s per cwt for New Zealand butter in London, was reached in October last. This increase in price was due to decreased production in New Zealand owing to dry conditions in early spring, lower production in Australia about the same period, short supplies of Australian and New Zealand butter in London during October, and anticipation of the effect of a proposed agreement between Germany and Denmark which would probably be the means of diverting a portion of the Danish output from England to Germany. “It is estimated that by the end of the production year the quantity of butter manufactured will show an increase of, approximately, 7 per cent., while the production of cheese will have decreased by, approximately, 8 per cent. “The exports of butter and cheese for the last two years were as follows; —

Wool “During the second half of last year an upward movement in prices took place, due principally to the prosperity in the home trade, which experienced a notable improvement in exports. Available supplies were readily absorbed at firm values. The outlook for the Dominion wool sales which commenced in November was greatly improved. The opening sales showed that values had appreciated materially. As the sales progressed, a further improvement in prices was recorded, and the market remained fairly stable throughout the season. “The total number of bales sold at the Dominion sales for the 1035-36 season was 737,454, which included a considerable amount of wool carried over from the previous season. The realised was £. an increase of £5.439,417 over the return of last year, when 471.512 bales were sold. , , , “The average value a bale and per lb of the wool sold at the Dominion sales the last two seasons was as follows: —

"These figures show a satisfactory increase, and not the least Pleasing feature of the position is the fact that the substantial carry-over of wool at the end of last season has been reduced to very small proportions.

Frozen Meat "The season opened up much better than last year, but, owing to the exceptionally wet weather experienced later in most districts the conditions for the production of fat lambs became unfavourable. With the rank growth of feed, the lambs did not finBh well and gave a lighter average .carcase than at the opening of the sea&°"lt will be noted that in both mutton and lamb the total killings show a substantial decrease when compared with last year. The killings ot beef show some increase. "Owing to the dry conditions experienced last season, it is probable that the decrease in the number of lambs killed will be offset to some extent by a greater average weight over the whole of this season. "Prices for lamb on the London market remained fairly constant until early in March, when values receded. Prices for mutton have, with minor fluctuations, remained fairly steady throughout the season. Purchasing prices in New Zealand have been relatively high owing, mainly, to increased prices for wool and pelts. "The killings for export of beef, mutton and lamb for the year ending March 31, 1936, with the figures for the previous year, are as follows:

“No one studying the successive bal-ance-sheets since 1895 can help being impressed with the remarkable progress the bank has made. Much credit is due to directors and management for steering the bank safely through those early, highly dangerous times. For some years subsequent to 1895, although increasing profits were earned annually, no dividends were paid to shareholders, all surpluses being used to w r rite down assets and place the bank in a strong financial position. To-day the shareholders are reaping the benefit of that policy. "You have, no doubt, noticed that there has been a gradual reduction in the earning power of the bank. This has been brought about by a general fall of interest rates both here and In London, by a curtailment of advances, owing to lessened demand, and by increasing deposits which cannot at present be profitably employed. Moreover, the amendments'of>|he Reserve Bank Act and certain provisions of tEe Primary Products Marketing Act will have a tendency to further reduce banking profits. “Mr William Watson, at the last annual meeting, drew attention to the fact that a strong financial institution must be of great value to any country. If this bank had not, over many years, built up strong reserves, it could not have carried on the business of the country so smoothly, nor would it have emerged from the depression (through which, happily, we seem to be passing) in the strong financial position we find it holds to-day. “It give me great pleasure to be able to say that during the years I have been a director of the bank, to the best of my knowledge and belief, no customer has been harshly treated. On the other hand, any client finding himself in financial difficulties and showing a readiness to help himself, has ever received the most sympathetic consideration.

“Further progress towards economic recovery has been made during tho year. Trade has been more active. The yield from sales tax shows an increase of 13.7 per cent, over the previous year. Building activity is greater. Unemployment figures have been reduced. On provisional figures, the Dominion internal revenue for the year was £26.170.000 (exceeding estimates by £430,000). and expenditure £25.900.000, giving a surplus of £270,000.

“In conclusion, may I emphasise, by no means for the first time, the urgent necessity of facing the fact that for New Zealand the United Kingdom is practically its-only market. “If due regard is paid to the manifest advantages pertaining to a closer reciprocal trade relationship with the Mother country, and if that reciprocal trade relationship is wisely fostered, New Zealand, with its genial climate and fertile soil, should find that general prosperity is not unattainable.”

Report Adopted The motion for the adoption of the annual report, which was moved by Sir George Elliot, and seconded by Mr R. W. Gibbs, was unanimously adopted. Mr C. J. Harcourt said that the chairman had covered the' ground very fully, but he thought that remarks in regard to the London staff applied equally to the New Zealand staff, and that not only shareholders and the bank’s customers, but the public generally were quite satisfied with the way in which they had oeen met by the staff. On the motion of Mr Stronach Paterson, seconded by Mr Harcourt, a vote of thanks was carried to the directors and staff. The chairman thanked shareholders for the vote of thanks they had passed to the directors. It was pleasant, he said, to receive the appreciation of shareholders of the efforts of the directors and the staff. Thanks were also returned by Mr F. W. Dawson, general manager. He was sure that the staff would stand by the bank at all times. Managers had had a most difficult time during the last few years, and he thought they had carried out their duties exceedingly well. From time to time he had received letters from the bank’s customers voicing the appreciation of the services of the staff. Mr William Watson, a shareholders’ director, returned thanks for his reelection.

o" in in o . w l~ T* ic r* l/i in u y C c o o CJ CO >% a a a Oi * S ** ww £ £ £ 1932 30,857.000 22 510,000 8347.000 1933 82.677.000 22,049 000 10.628,000 1934 36.834,000 20,908.000 15,926.000 1933 35,985,000 26,082.000 9 903,000 1936 39,900,000 30,072.000 9.828,000

s_ u in ? o C3 ca ra 3 Sogo. £ <U Ps. Q o .- o t a •a £ £ £ 1932 10,998,822 34,466,289 50,232,337 1933 17,461.283 35,208.988 48,500,274 1B34 21,657.550 39,455,883 41 575,526 1935 23.965,035 37,135,308 43.077,115 1936 27,194,213 38,403,479 45,105,912

Year ended Butter. Quantity Value 31st March. cwts. £(N-Z.) 1935 . 2,701,320 10,928,353 1986 . 2,686,502 13,736.807 Year ended Cheese, Quantity Value 31st March. cwts. £ (N.Z.) 1935 . 1,937.228 4,645:803 1936 . 1,630.017 4,311,824

Season. A bale. Per lb. £ s. d. d. 1934-35 ..968 6.498 1935-36 .. 13 6 10 9.144

1935-36. 1934-35. Quarters of beef (chilled) 106,403 35,701 Quarters of beef (frozen) 294,865 355,531 Carcases of mutton 1,629,397 2,318,930 Carcases of lamb .. 8,439,247 9,398,659