HOPEFUL OUTLOOK.

Dominion, Volume 3, Issue 681, 4 December 1909, Page 10

HOPEFUL OUTLOOK.

BANKING AND TRADE. ■■ : . SPEECH BY. MR. H, BEAUCHAMP.! V BANK OF NEW ZEALAND. . ! Tho: half-yearly, meoting. of shareholders of the Bank of New Zealand was hold at tho head offico yesterday.. Tho directors, present wore: Messrs. Harold Beauchamp (chairman), Martin Kennedy, W. H. Quick, W. W. Milno (Oamnrn), and J. B. Reid (Oamaru). Messrs. W. C'allendor (general' manager),' and B! M. Litchfield, (chief .auditor), were also in attendance, and a dozen shareholders were presonfc ■'■ - ■'■'■'* '• ' ... ■ V CHAIRMAN'S ADDRESS, : ■ The chainnan, addressing: tho shareholders,' said' that at-.the, half-yearly meetings, as. they were aware, no' statement of accounts was presented. The.'principal business'was tho election of a : director, '.and 'for that position Mr. Martin Kennedy—who had occupied a seat on the board continuously .as the shareholders' representative sinco 18SJ4—again offers his services. ; There -being no' other'candidate, he had.much pleasoro in declaring Mr. Kennedy duly; elocted. ;-..'. .;;;;■.. ■■-.{■.■; '.;: : -'',:'.;:'.-::;.\-:0'':. ■■■'; '.p-'.' .'.'A Dividend of 5 Per Cent. - "When addressing'you in Juno: last," continued Mr.; Beauchamp, " I mentioned that, consequent upon; tho conservative policy then being pursued by this; and other banks trading within-tho Dominion/you .should be prepared' for a diminution in our profits; Our accounts for.-.'tho'• half-year ended: September 30 show: that these anticipations wero realised Still, ,tho results for tho period under review aro gratifying,, and I havo. no doubt that, at tho 'closb of tho present financial . year, wo shall.be able to transfer a; substantial amount; to our reserve fund, and recommend tho payment of a dividond and bonus equal .'to that you received for tho year ended,-. March 31, ;i1909.,:.-.ln''- the ; meantime, for the; half-year ended September. 30 .the board -has''declared an ' interim: dividend of 5 per, cent. ..to- the holders ..of ordinary, shares,' and. a'., similar, amount in- respect: to ..the .preference shares issued 1 to 'the. Crown. -This dividend will bo payablo at head office on Monday next, December C, and at branches on receipt of advice. ' '/' -V' .'-'-:/'-';;..' Taxation.. . ■■.-.'■ '• '"-If the proposals 'now,before Parliament regarding tho taxation of banks become law, Itllis: 'institution; will -bo : called -upon-'.to con--trib'uto o much:larger.;siim.;than it now;does; (Calculated. uppii. tho present voiunio r of the' ißanfs business,''tho increase.. will ■ amount ;to not less.than ,£15,000 per?annum!. 'It-may interest you to knott-that our taxation'under -all heads ,last/year -totalled JC35,640." This, I may 'mention, included payments to mnnicipal-j;ities'.-atd public, bodies as,well as to.tho'general government.' .-.,':'■' --.':;•'0 , '.;■.!

■;,',;.; Banks -. ancl the - Late; Depression. ;..' :' ".With these' preliminary^''r6nißrks,.''l' dosiro' now- to congratulate the shareholders of - tho -Bank, and the country generally,.an tho,better, andmord promising monetary conditions that ■■prevail'' to-day, and I.do hot,think itwbuldbo improper ,:bn mypart should I • claim somo credit - for. itho , banking i institutions of.. Now Zealand for the - change that has taken place.' A year ago,'the banks .wore criticised insido and outsido :of ; Parliament for not lending' freely, notwithstanding, that tho, aggregate of the advances, and -discounts, :as .at. September .80, 1908,- exhibited 1 a' very, 'substantial increasb; on,tho ;figures:of:, the.-;previous- ; year. A good many people : are hndor tho impression. thaiit is the. duty, of tho.,banks to. advance,.against'■• all. and -Gvery' kind' of .security;.' :" j rh'a.sooner this'; impression: js jemav.ed :'.the"_bettej:„.Tliat.' tho hankers;Of the .Dominion pursued.tho right: course •:dtfrin'g''" ; »'tlio>past'- , .twelv6:''or-'eighteen .months is .prQved...to:somo extent by ; .the:easieri tendency; that, now prevails. ; ih tha'-lbcal inoney market. The; banlcs are..to-day in a -much : sti-onger ; quite i capable-' of: furnishingall: tho' legitimate 'banking.ja'ceommbda-.-.tion' that maybe required. : The bank-returns, for the .'past:, quarter..ghoiv' the strength,. and. wo havo : -butto compare tho aggrogato of the' fixed:arid free deposits nnd the advances arid the.Jfignres."-for- the.cprresponding quarter last;Vear;t'dVppreciato tho.point. Thoy are as follow:—■'.;,.> v: 1 -'- -'' ."'■, ■'.■•'* ■ •' ■: f ; Fixod.and-.FreejDoposits.:■,•':::' -•' '■'~'■> '^-:: : :: ;■■'; -.; : ;; : :.'-,,-:'.:; :v>v:isoo. ■.' ;■ :- : \1908..-- : -; ; ; ."-'•:--'.Bahk.-v-' ? ' :'w'±or> \\-J& - : ':.!'' .'£ '.'■'■■: ; New Zoaland' ...;..v.v....-;10,199,028 '9.49G.580-,' • '-:■■ Union'-'..■...;..V1V.;. i i'[: , ! Now South': Wales v '. i .V'.' 3;b0i),41G ■3,657,70G' ; : :-■ Australasia. -.V....:.....::: - ; 1,730,224 ; •; 1.7.71„716 ; - ~ 3,243,503;. ~3,197,471 - 'f'■'; v. ;; '.."..';,• ";■.;'■; ./,;;;' 20,979,120;. 20,310,007: - i (Note:: These'-figures-do'not, include;,G6vorntaent deposits,),, ■'•-*;>, ■<■ r'ii'.f;'' j | ! 'V : ;' -''"< .■ ';■['■ !..--. : ''.Advances'and Disconhts,' . '• :' :; '■(,'"'■■ - '::<"'\:;vl:-: ; :-: : -V--V: ;; ■ - 1909.- -„;' : ;a908. L '■': ■'■.■ -Bant. ty. '-!. ■■$ If iV4' Wis X's■%&/■■. '-JJ..i.'...'.'i'.;i' -?7i09t,4i1:' 8,480,888 : ;;Uni0ii:i : ...::. 1 :.V.'i...:i.;r...; 1 :3,100,610'?- 3,371,232 •';': Now South Wales' i.:. '■: -2,505,193 : '.' 3,211,533 V ■Australasia -.......'.:...''...., ; 2,700,305:'3,290,663 :■', ■'. National '.V..........i..;...::|.l 2,657,188 ~2,857,043,: ;' ; lf ■ | : .' : :l'l :{ 1118,170,707. ; |21,217,959..; -last year the .'banks, helped their, customers.; liberally, and : to .this .is largely duo; the fact that tho:depression was mild and'of short dnrar tion. " ' ■■•'■ ■■■■''...'':'■:..■■.: :,■::■ ':',..■ < ■c'- r ---i.' V_- -;,;-';. "--; -; v:"-"-. ' ; (The' Outlook, v ■:;./, -.;/;. , :"A distinct revival in trado appears' to havis set in-all over the world, but particularly /in the' United late' years:,tho storm centre of the. financialt'world; ..Evory.mail :re-' c'oiyed"recently''.has'■brought' intelligence of rehbived 'activity', iri:' one .industry orr'another. The-steel particularly :busy, ..tho'demand, for :lsteel. rails being .'especially: strong.; The. railroad companies of America have.lar'ge development works in; hand, and in .prospect, involving an expenditure of ikany.million dol-, lars. Tho Union Pacific:and-Southern Pacific railway systems' have ,: extensions 'aggregating approximately '2000' miles in course of construction.' :'i'he production of pig-iron in the United States' is :noiv--up to, the. highest ; level of irocent-.'years.; , ; Thel'.report,.of the,. Gorman stool syndicate's' statesVthat the orders, on'their books on;. September!: 10'.amounted:,to-v.about. 550,000 tons 'more' than 'at. tho-.cbrresponding period : last year.. -In Great- Britain; there,is -a distinct improvement. , Shipbuilding—the main industry of. .tie" United kingdom-is showing sighs of recovery. 'According .to : Lloyds s' Kogistor of Shipbuilding Returns, tho tounago under construction on Soptember 30 was.about 32,000 tons more than that which was in hand at-the" end of tho: Jiino- and ; about 45,000, tons more: than was building twelve months; ago:: ,: The European; and American money-markets are at the moment rather, high (the Bank of England rate now. standing, at 5 per-'cent.), but: this, is not an--; unusual feature at this time of the year. Tho Mother Country is unfortunately disturbed by:.o;pending:ppH-.ticai:-cricis,-:,for-.a;general election is a: great drawback''to trade.; ,; : ';:.';

"W 'Exports and Imports. ; , ' v . ' ■:/'Tho favourable 'conditions 'now apparent, in Europe and America are being reflected -in Wow Zealand; ?Thc 'export and :import returns .prove conclusively.'-thatythe community had pronted by the .temporary depression. and producers' havo'beon forced td face and their efforts have resulted equilibrium being restored. The exports show a substantial suTplus'.over the imports, and, so far as we are concerned, that amotats. to_a favourable trade balance: This 'point; may be emphasised by figures. The values of exports and imports for. the year ended September SO, 1909, compared with tho for the,two previous years.show:as follow:—.,•: •; ; : i'-!.:/\. :; '.V-r----' ! : ':.,'' ; -Bxports.'. ;,: : : .Imports. . ■Year ' ■ ©B j •. £ 1906-7 ...„....i...» 19,891.840 '•10,071,887': .1907-8 ..-.16,370,587 , 17,750,868 ■. 1908-9 .................. 18,700,156 ■■■ - ; 14.910,005 (Note: These figures do:not includo Specie.) .;. V"lt will be seen from the figures; I havo quoted that, while in 1907-8 •' the. imports exceeded the Exports by .£1,380,281, for the year just onded the exports '■ exceeded the imports by .£3,784,151.' Wo are. in. effect hack to; tho position wo wore in in 1906-7, which _was tho year of our oxtromo prosperity.. It is necessary, for this country to show a substantial excess of exports over, iiriports.'becaiise we have to meet nhnnally a very'largo interest liability in connection with public and private indebtedness.' We 'have, .'it would ' seem, practically, recovered the ground Inst in 1907-8, and we may, • now : reasonably' anticipate: a, further forward ■'' mbvouibnt. ; Thore aro many factors that, warrant this expectation,: and it as';woll to make a brief ■ reference ."'to them." '-■:'■'■ .:■''■/■ : ':'•';: Wool. ; i:'""C'/: ; Continuing,; Mr. Beauoharop'; said that tho prices ■ obtained for the first of .the, now season's wooUclin sold in Wellington' aud in other parts of tho Dominion, as well as at tho sales hold in.tho chief centres of:tho Commonwealth, indicated very clearly that, at itho .moment, thero.'.'was'ri "strong .demand for :this staple. Values realised were considerably in advance of _ilnMa-cuiieal_ a.Year, una,. and. latest .London

cables showed that the" market presented features of groat strength. On Novombor 24 tho Bank received a cablegram from its London office as follows:— -....:

"The sales have opened with strong competition and large attendance of buyers. Tho market is good, owing largely to shortness of supplies. Prices aro }d. to $d. per lb. higher."

The chairman also read tho following cablegram received that morning, and dated London, December 2, 1909:— "Tho sales have .closed very firm, and prospects aro good. There is a good demand: for all kinds of crossbred wopl.. Prices for farmers' lots, overugo condition, are not likely to'show much change next series.. Threo thousand held over j Now Zealand 600. Current prices for North Island - farmers' lots, Palraerston North style:—Coarso crossbred, 36/40's quality, average condition, 9Jd. ,to 10d.; medium ' crossbred, 44/40's quality, average condition, lljd., to 12d.; fine crossbreds, isos' quality, average condition, 133 d. to 15d. '

This report on' the close of- the sales was as satisfactory (continued the chairman) as the former one upon the-opening. Whether this firmness would be carried into tho new year is problematical, for wool men were likely to be guided by their well-known maxim, When wool is dear it is dangerous j when it is vory dear it is very dangerous." Values wore oxtremely high just how, and only twico_m tho last,- nineteen years had thoy been quito as high. There might be a reaction, but in any. caso it .was very probable that higher prices than-.la'st season would be obtained. Now,.Zealand would produce a larger clip this year, and, with tho higher, range of values, quite two millions sterling should bo added to the income of the; producers. .■■...., Other Exports. ■The exports of both butter and cheeso showed very substantial increases in quantity, and as values wore practically up to the level of last year, it was reasonable to anticipatei a tamy substantial increase in tho incomo from this , source. Eoughly, this increase should represent .£250,000. Mutton and lamb had _ recovered from tho depression that affected them in July and August, and although tho market was showing signs.of weakening from, pressuro of supplies, the Dominion should, with an increased output, be able to-maintain its-in-come-from this branch.of industry.^ ■. v£here was some hope that developments in the chilled beef trade, with the aid .of ..tho Linley process, would teko % placo in the near future, rim success of the shipment by. the ..Marathon, from Queensland was. very encouraging. .Hemp, had.improved materially,- tho,cxf. quotations for Januar.r-March shipments .being well, in advance of show riding-a year, ago. Hemp was in point of ; i fact at a remunerative level, and most- of thu mills, could -be ■ operated to_jay. An' expansion in tho output -of this prooVacq was: one of the certainties,;',of , the-, season.. Wheat, dnd-i oats and .other rgrain and putse would again ."add tttri 'our- expSrtsV- and, taking all the factors into considoraHoil, he was of. opinion that end of the- pro.iuco year on September «. tho amount.- of >ir exports would establish a record in pi)ini?of value." -, iV '

,■ Prpspocis Decidedly Good. "The promts, before . us are £ decidedly good." : concltded the [ chairman, A,and, this Sank, •with.'vjjs ramifications and ulcse,connection- with :the producers, must ..necessarily benefit. I cannot, however, refrain: from repeating a warning note:.caution must con&nue ?o mark .tho policy: of tho trading community,- and the land speculators .throughout tho Dominion must endeavour to moderate their views on values. -New;, Zealandv •■ has greatly increased her ■.obligations- in ..recent years, and while she is well able to faithfully meet all engagements, there, is no, reason why the people:should be handicapped in , their work ;by, ridiculously high land values, Caution':; should bejhe.walchword of the people how:and always.". ' .-. '.•..'•

' MR. MARTIN •kENNEDY'S-'-ViEWS. ;' MrVMartin- Keuncdj-iv in returning .thanks toitho-.Bhateholdcrs for his tho board, congratulated ■■ the chairman upon the able ieech 6 he. had. just however, one passage >u ' the speech , which, might cause a little uneasiness to shareholders. fcrred to. the falling-off in the profits ot the BaX and stated tEat,the di.vidend would bo j confined to 5 percent.; Those remarks would fend to strengthen .an dea in the imnds of shareholders that the directors had notsuffi. icient confidence in tho stability of_the : Bank. ■His own opinion was-woll known. . He hod declared it on more It was that.so long.as the Bank was mahng tee pro.fit that it had been making, and- so .long as there waii'good reason to; believe that it .would continue .to make, such profits, ~t. was- in as good a position.as any.other bank in the ■ Dominion..' did,it; not pay dividends equal. to those of any other bank? . Ihero must be it reason'other than the.building up of a!'strong reserve.. The present reserve was : quite as good as any other bank-not so large in voluino certainly, because -other banks had larger capital) larger responsibilities, and larger demands upon;their resources through trading in other colonics.. The board had had'many applications from shareholders desiring that the money that had been written off- should, be restored to form; of capital; This" claim was not- altogether ohimer. ical-or it .would not be so,' if; tW constitution of the Bank were'tho same as those of other banks. ■ There was scarcely,, any institution that had written off capital and did not re' store it in time of prosperity. His own answer to'those shareholders was that tho constitution of.'tko Bank was such that to accede'to their request was altogether', out ot the question. That, howover, was''no reason in his esnina-. tibn why larger dividends should not be distributed. He-was disappointed to learn that although it was intended to pay a bonus: on the .nest occasion, therewould be no. bonus at iprescnt. " ,' " '' ._.,'.--' ; . Higher Dividends Desired. , -He had not gone back■: upon his previous opinion that the Bank should pay dividends equal to those/of any other bank, and though he'was'a director, he .was not going to conceal that opinion. Ho .trusted'ho would: not bo accused of a wont of caution; Thcro wore many.kinds of caution..; There was a caution begotten of strength, and a caution • begotten of absence of. strength./ Ho was quito ■ sure that the. gentlemen on the board '■ had no apprehension but that the Bank' could ■ reason-, ably, pay a 2i per cent bonus .on'the-present occasion, and also on tho ntixt- occasion,- and the; shareholders had a right •; to"' expe'etf' it; : They'could not expect to have •record- profits' every year. Every time the balauco-shoet declared' such high profits as had.-been/the ca£6 in : samo past years; certain of the public cried 'out that the' State'ought to have:- a- larger share of the profits, or more shares than 'at present. He would-.not mind such thingß being said by responsible i peoplo, but when they-were debated in.Parliament, and ; threats were uttered as to what the majority would doi he thought it was almost time for the shareholders to rouse thomselves. arid /protest against. such proposals, niid if thb: ,-mattcr went much furthor'they should liskthe share-holders-in London to, join them in protesting. '. The State and the Bank. :;:■ . ■It was probably because tho Stato had obtained its shares in the Bank so easily that the people to whom ho had referred called upon the Government to take more now. 'The position when the- Government obtained, its interest in the Bank was entirely different from tho present position, and. he was sure ho would riot be accused of want of gratitude to the Government' for the services it had rendered to thp Bank if he said that the shareholders must resist to the lost any attempt to : induce" tho State to .''acquire a larger share(Hoar; hear.) If the Government did. so,/it should 'take shares in the same- way as it took any. other property, -.. going,' before the Compensation Court,and paying iicco'rding to.the full earning power of the .share's. Until the position was defined in that way, there would always bo uneasiness .among tho shareholders here and beyond tho Dominion.' (Hear, hear;) . The - sooner this '-was. understood .the sooner the bank : 'would obtain the confidence of the people of the colony.. In advocating' tho payment of av reasonable dividend such as shareholders Woufd approve, he would nsk why the factor of the preference shares should bo allowed to prevent, their getting such a dividend. The interest of the preference shares, was guaranteed, bnt they carried, no further'.claim -than that. Tho Government' was given control over the Bank for the purpose,/ of ensuring its stability and for no other reason, but would any reasonable man say that an extra 2} per cent.,, or an extra 5 per cent, was going to risk the stability of the bank? The idea was absurd. They must not be afraid to exnress their'views ph.account of people clamouring for abifTKor slico of thn Bank. They clamoured for other things, but | that | did not proyent pcdplo ducting their business in the way they-thought most' advantageous. He coriirrntailnted the Bank on the declaration of tho dividend, but wished to again/express his regret that it:, did 'not. carry a 2J per cent, bonus as. well; (Applause,).

;.-'.-■; MR. BEAUCHAMP IN REPLY. ;-; The ohairman said he quite recognised that that was Mr. Kennedy's .'opportunity ■ of ■■■laying: his ( views before tho and it .wnS;<iuitß right for him to do so. .-As a rule 'tho directors woro strictly in accord in regard to the policy laid down by tho board and there wis no dissension among thorn. Tho amount of-tlio profits for tho first half of the present :fmanciaLijcar. .being .-ItiuL: :eix _montl« „. ended,

Soptembor 30, ' 1909, > need canse no uneasiness. They wore largo although not so largo as for .■ the corresponding half of lost year;' He had already indicated that.it was intended,.at the oloso of the.present year;- to make'a substantial addition" to the reserve/fund and pay the same dividend and bonus as last yoar. Among the companies that he had been connected with; and had read of, ho had rarely seen an instance of a bonus being paid at the end of the first half of a financial year, as suggested by Mr. ■ Kennedy. Bonuses were usually paid at the end of the. year .when, the financial results of tho year had been ascertained. He would not tie himself down personally as to the amount of the bonus, uut shareholders might' look forward with confidence to getting the eamo return on their stock as they had last year. Having regard to the Present profits, he would support 'a ■ larger onus than 2J per cent.—(hear, hoar)—but he had a feeling that they ought not to incrcaso the present return to shareholders until the reservo had reached one million sterling. Tho 4 per cent, guaranteed debentures would mature in 1914, and unless they build up the reserve very rapidly, they might nave to apply to Parliament for authority to increase the capital ,of the Bank. , There would..be danger in.such a step as that, because, once they approached Parliament, the whole of the affairs •of the Bank' would bo opened up,. and Parliament- would ' be able to attach to the granting of tho authority such' conditions as it might think necessary. If, on the other hand, thoy steadily piled,Up their reserve, not only would it reach a million by 1914, but thoy would also bo able to continue trading without increasing their capital. That was a- consummation- devoutly to be wished.- When the Bank had strengthened its resources by adding -substantially to the reservo fund; he saw no reason.why-it should not pay something like the dividends paid by other banks.: At various times there had been preliminary negotiations with tho Government m regard to an increase of the capital of the Bonk. The Government had on all such' occasions acted with strict reasonableness, and he did not think the terms would bo particularly harsh; but. he thought it would not bo desirable to increase the capital, or go to Parliament, if, by, carrying out a steadily conservative policy, they could obviate such a necessity.' He was glad to assure tho shareholders that everything was going along extremely satisfactorily,' and he hoped that/ by means of a greater earning power during the next few months, they wonld be able to make up for the slight ■ fnlling-off in the profits. (Applause.)-: > ■.■•■•-■" .;-!■ ;..:•; THANKS. ' ■ Mr. Kennedy said he ..wis; gratified by the chairman's remarks .in regard to the question of .bonus. Ho .proposed a .vote of thanks, to the chairman for,his address. .. The shareholders had\evory-Teason to bo satisfied with tho: cbndiict.-of the' business under the chairman, and 'tho' management* generally. -. The: vote of thankLwas-seconded by Mr. T. S. Weston,; carried..,unanimously, and briefly acknowledged by-Mr;'Bcauchamp. '" ,' ~. Thanks,: to. - the -. staff ■.'-' were "voiced : by • Mr. Weston'and. Mr, J.-8., Hdfcoutt,: and. acknowledged by-Mr. \V.:Callender (general.manager).