WAR & FINANCE

Dominion, Volume 8, Issue 2492, 19 June 1915, Page 12

WAR & FINANCE

ABNORMAL EASE DISTURBING FACTORS CONSIDERED ■ " " COMPREHENSIVE REVIEW BY MR. HAROLD BEAUCHAMP MEETING OF BANK OF N.Z.

The annual general meeting of propria tors of the Bank of New Zealand was held yesterday. Mr. Harold Beauchatap (chairman of directors) presided, and other direotors present were: Messrs. E. W. Kane, Martin Kennedy, W-. Keece, J. H. Upton, and W. Watson. The 'general manager (Mr. W. Callendor) and the chief auditor (Mr. B. M. Litchfield) were also in attendance. _ The chairman,' moving the adoption of the report and balance-sheet, delivered an interesting, address on the' finanoial situatian generally. "The momentous events of July and lAugust last, involving the British nation in the great Buropeon conflict whioh is now raging," ho said, "and the consequent unprecedented conditions Tinder ■which the finances, trade,. and commerce of the Empire have been , conducted; will, ao doubt, have made the bank's operations for tho year of more than usual interest to shareholders. It will have been with satisfaction, therefore, that -.you; have perused tho directors'. report and balance-sheet from which you would see that the board, after making prevision _ for all bad and doubtful debts, de-, - preciation of investments, and other apSropriations,. was able to;' recommend a istribntion to shareholders on the same scale as in recent years.New Capital. "At our December meeting,'l mentioned , that the 559 shares, unapplied for of the issue of 75,000 now ordinary shares, were being offered to shareholders for sale by tender. Applications were received aggregating 10,794 shares, tho dverage' prieo . tendered being ,£l3 3s. 9.d. per share. Tho 659 shares were alloted to the highest . tenderers, at an averago 'price of -'£15 ; 10s. Ed. per share. ' ' "With regaTd to the guaranteed stock,, :1 this,lyou will-, note, ■appears at .£528,988, - as against <£1,000,000 in the previous bal--7 ance-sheet. The old stock matured on July, 19 last,' and, the bank's finances being in a. strong position, tho board decided not .to. underwrite the new isstie, ■tut to. give existing holders the option of exchanging their stock. The amount . shown in the balance-sheet represents the extent to' which holders have availed of the option. The balance of old issue, with the exception of a few thousands that have not yet come in, has been paid off. At a suitable juncture, :the bank will make arrangements to issue the-balance of the hew stock; but in the present unfavourable state of the London money market nothing can - be done, and, the bank's finances being easy, we are able, without incohyehiehce, to await the arrival of a favourable opportunity. The Reserve Fund. Last year this fund was increased to ■ 550,000 by the transfer from profits of ,£175.000 ; I have pleasure in announcing that, this year, by the addition of the premium received on new shares (less expenses of issue), £365,536, and the transfer from profits which the board proposes to make, £84,464, our reserve fund will stand 1 at the substantial figrire of £2,000,000. Of this amount £1,000,000 is invested, in British Government securities. . ' ' Liabilities. Notes in Circulation (£1,676 051) are more by £686,169 than at March, 31, 1914. This large increase in due to bank notes having been legal tender since the commencement of the war.' Gold has been gradually - withdrawn from circulation, and notes have replaced it. Deposits, which include free, fixed, and Government deposits, stand at £18,741,657, an increase of £671,044, as compared with the figures of a year ago. Government balances aro . somewhat less; but deposits from the public—both free and fixed—are substantially larger. Tho causes and significance of these movements I shall deal with preBently. Bills payable and other liabili- ■ ties stand at £1,670,103. an increase of £266,647 on the figures of twelve months ago. Assets. i Coin and cash balances at bankers, and "bullion, together amount to £4,827,522, as against £3,377,185-at March 31, 1914. The increase in, our note circulation and deposits—to which I have just referred—and the general financial unrest, render prudent the maintenance of larger gold resorves. Money at short call, Government securities, and other securities in .London, .together amount to £5,136,996, ' aii increase of £60,248 as compared with twelve months ago. The totals under this heading, together with tho amount of bills receivable and investments in the colonies, are, I may mention, equal to 64.41 per cent, (or 12s. lOd. in tho £) of the total liabilities of the bank to the public. You v will be pleased to hear that full provision lias been made for all depreciation in investments, the whole of our investments ; securities having been written down to the minimum Stock Exchange official quotation at March 31 last. Bills receivable in London and in transit, exhibit an increase of £137,220, as compared with the, figures a year ago, and now stand at £3,301,301. Ample provision has been made for any deficiency in respect of bills held, drawn upon banks, merchants, and others in belligerent States, and which, ■owing to tho war, were-not provided for • ,when due. The aggregate of these is inconsiderable. A'dvances. "As compared with the figures of a year ago, bills discounted are less by £93,568, and now stand at £1,186,458. Other advances (£10,662,707) show an increase of £582,248 —a natural 'movement in view of our additional capital re--'sources. ' i _ Landed Property and Premises. After appropriation from profits, now lnade, of £50,000, this item stands at £451,867, as compared with £449,577 a year ago. The bank's steady growth entails a considerable annual expenditure in providing suitable premises for the satisfactory conduct of its business. It has been decided to place another story* ■ on tte Wellington head office building, and to enlarge the banking chamber by taking in practically the whole of tho space on the ground floor. , This will give a considerably increased area for the use both of the office staff . and the public, and will, it .is expected, meet all requirements for many years to •come. Profit and Loss. "The net profits for the year, after paying interest, on guaranteed stock and making all necessary appropriations, including provision for tho bank's annual ,irant to the provident fund as well as Su, s i oi o and the allocation of £50,0uu in reduction of bank premises and furmturo accounts, amount to £319,486 as compared with £308,490 at March 31, 1914. Adding the amount brought forward from last year (£51,608), and deducting tho amount of interim dividend at 6 per cent, paid in December (£100,699), the sum available for distribution ia £270,394. The directors now propose to - pay a further dividend of 6 per cent, and a bonus of 3 per cent, on ordinary and : "B" preference shares (making 15 per - cent, for the year), and a further 4 per ,ceut. on "A" preference shares (making 10 per cent, for the year). Tho distribution to shareholders will therefore amount to £229,459 for the year. Of tho balance remaining it is proposed .to transfer £84,164 to the reserve fund, and to carry forward' £57,170. In looking oyer the profit and loss statement. it will bo noticed that "rates and taxes'" aro some £13,000 higher than ■ last year. This increase is very largely ! duo to the increased note- tax, consequent • upon tho temporary expansion of tho noto circulation. Samoa. Of German territory occupied by Great Britain since the outbreak of the war

Now Zealand is most interested in Samoa, owiiig to its proximity to the Dominion and the fact that it was, tho first captured—and that, too, by a Now. Zealand Expeditionary Force. German currency in .Samoa has been laitcly superseded by British, and a'branch of this bank has been established at Apia, the principal town of German Samoa. The future of Samoa will not be determined until the olose of the war. Meantime the country is being held by Now Zealand, oil account of the Imperial authorities, and is trader military control. War and Finance.' It is imnossiblo for mo to avoid reference to the great conflict that is now convulsing the world. The war, in which practically all the Great Powers are. engaged, has had, and must continue to have, a very disturbing influence on finance, trade, and coinmerce, Great and profound economic changes have occurred, and no one can as yat faintly estimate the' far-reaching effects of the titanio struggle. Whilst other countries havo found it necessary to prohibit the export of gold, Britain has preserved its traditions and maintained throughout a free gold market, except, of course, for exports to enemy States. "Recognising tho important part which finance must play in the war, the ; British Government ..has . determined to conserve British financial resources to tho Utmost extent possible, in order that supplies for war purposes may be available, as and when required. With that end in view, it has practically taken control of all new capital issues in Great Britain, by providing that no issue shall be made that has not been previously approved of by the British Treasury. The. principle upon which the Treasury will discriminate upon any proposals made to it, will be whether, or not the contemplated isstie can' be shown to be 'advisable in the national interest.' , This - regulation, it will be at ouce seen, closes ths'l.ondon money, market to all issue of capital oil account of undertakings unconnected with the British Empire and. to those even within the British Empire that are not in close asociation with Imperial interests. The. result is; that the vast stream of credit constantly flowing to London from Britain's world'wid'e investments Is accumulated there as in a financial' reservoir, the outlet of which is controlled by the British Government. In this way, supplies of that essential sinew of war— money—aro assured, not only for the British Empire itself, but also for her allies. The facility with which all needs have 60 far been fully mot, at rates fluctuating —as far as the British Government is concerned—frota a little over 3 per ceut. to a little under 4 per cent., is at once a testimony .to the effectiveness of the measures, adopted, and to the continued strength arid soundness of British credit in these credit-shaking times. Effects Must be Serious. . "I do iiot wish to be understood as minimising serious financial and' economic bearings of the position in which the world has been placed by the war. One cannot but regard with serious misgivings, the diversions of such immense volumes.of; capital from remunerative enterprise to the business of destruction, which leaves only devastation and no tangible asset in its wake. The mind is fairly staggered when it thinks of the economic" problems with which the civilised wo rid -will be faced when thi6—the greatest of' all wars—has been brought to a termination. The figures'thait will b» represented by the actual war expenditure, by the loss of income resulting from the paralysation of industry, and liy the enormous value of property absolutely destroyed, are,at present quite unthinkable; and when we add to them that greater, because irreparable, loss, not measured in money but in human lives, wo turn from the contemplation of it all with e. distracted brain and a sickening heart. The Only Consolation. "For lis, the only consolation lies in the fact that the conflict has been forced upon , us; thart we are fightiug the fight of liberty and justice, and that with the victory which we confidently anticipate will be ours, may come an assurance of aii enduring peace which, in the years yet to' be, will perhaps compensate in some measure for the losses and distresses of the present. As to the ultimate issue of the conflict, I do not think 'there can be any. room for doubt, if the British nation can be brought to realise that the greatest crisis in its history has arrived. At the-opening of the war every Britisher faced the position with a confidence, born of past experience, in the conviction that the nation would rise as one man to meet the emergency. T am, however, bound to confess to a feeling of the keenest disappointment and to some apprehension when'l read of the recrudescence of labour .troubles in Great Britain at such a critical'juncture, and of the consequent threatened deficiency in the supplies of those munitions of- war which aro absolutely indispensable, if ouir brave soldiers at the front are to fight their battles, successfully. I can conceive of no more despicable conduct than that which would leaves our armies and navies deficient in the supplies of the fighting material necessary for own defence, and for the successful prosecution of the war. I hope that there will be no further display of such un-British conduct, but if there should bo, I trust that the most stringent measures will be adopted to compel labour to give the full, generous, and loyal service which the nation demands, and undoubtedly merits, in the present time of stress. Maintenance of Trade, "The unceasing vigilance of the British Navy—the effectiveness of whose watch and ward is a matter of pride and satisfaction to the whole British Empirehas afforded protection to the British mercantile marine; and although some losses have, of course, occ.iyred, the-total is insignificant when compared. with the aggregate sailings. Up to 'the present the Kaipara and the Tokomaru are tho only New Zealand ships that have.been 6unk by the enemy. The debt we owe,to the sailors, of tho British, Australian, and Japanese navies can nevsr be repaid. "The British Government, feeling the importance of confidence as an essential to the maintenance of trade, announced, in the early days of the wa-rj the establishment of a Government Insurance Bureau through which cover for war risk could be obtained, charging for this national service the lowest possible rates consistent, with departmental solvency. This facility has been of the greatest assistance to shippers to and from all parts of the British Empire. It has enabled them to obtain full cover for all their shipments at reasonable rates. It is questionable whether, without it, underwriters would have been able to meet tho demands upon them. In any caso the rates for war risk ; would probably have been almost prohibitive. The bank's services have been at the disposal of its shipping customers, and the aggregate of war risk covor effected in London through the bank's agency has reached a large 'total. War Measures Here. "The measures which it was found necessary to adopt in this' Dominion, viz.: The notes legal tender proclamation, the prohibition of gold export, and the Mortgages Extension Act, are still in operation and likely to be continued until the close of, the war at any Tate. "Tho lastnamod Act has, unfortunately, proved somewhat -unsatisfactory. Designed primarily for the protection of mortgagors against possibly unjust and arbitrary action by mortgagees, it has no doubt been of much service in preventing hardships'to* mortgagors, whose liabilities were maturing and who wore unable to make provision for them. It has enabled them to carry on their mortgages at tho rate of interest provided in the mortgage deed, mid has, in that way, no doubt assisted to keep down the valiro of money for mortgage purposes, which runs to-day nt from 5!- to G per cent, per annum.' But the Act lias been taken ndvafbige of by quite a number of mortgagors who, being in the enjoyment of a low rale of interest, have, whilst pnssrssins (ho means to discharge their liabilities, claimed the protection of .the Act. and utilised llieir available funds in lending-on mortgage themselves at higher rates of interest. This is," of course, a perversion <rf tho benefits conferred by the Act. and it is understood that, in the coining liU'liamentary session, the matter will receive attention at the hands of the Government. Money'may Rise in Price. "We aro not at all sure that tho mortgagors in such cases are not overreaching themselves, or that those who aro bona fide claiming the protection of tlio Act are wse doing so. Thero is no reason to anticipate that a substantial drop in money values will take -place aitor the conclusion of the

war. Not a few in a position to judge ?-i? v icw Wint there will then be still _ further appreciation, and my own opinion is that those who aro rearranging i their mortgage liabilities, as they mature, on tho best terms possible, aro acting with a measure of prescience which future events will fully justify. Tho prevailing conditions in the great monetary centres ot itlio world aro bound to bo' reflected, sooner or later, in our local market; and, as J- see no indication of easier prospects in tho centres, I am forced to conclude that money values aro likely, for tho present, to remain comparatively high, it is true that there is not, in ilie meantime, any shortage of money; but this is largely owing to the fact that cnterpi isa is stagnant, and that trade gener- ■ i in much restricted channels. when the future ia more assured, the supplies of floating capital will probably bo quickly absorbed and money may become scarce. After itlie war is over, if the conditions of the international settlement are such as hold our prospects c-f a lasting peace, and of cessation of competition in armaments, there may be after a tow years a permanent drop in money ■values, but I do not think that point will be reached for some time. These, are, however, merely my personal views, and I wish it to be understood that I lay. no claim to prophetic attributes. in these islands our position is a highly favoured one. The horrors of this war -the most distressing of all wars-are iraown to us practically only through newspapers. But for the fact that some ot tho best of our manhood has gone forth to do battle for the Empire, and that the list of our dead and wounded I rc a i. i ? on ?' We should be almost unattested by the momentous struggle that is m progress on tho other side of itho world. Indeed, it .may be truly said that we are actually benefiting by the tragic events that are being aiaoted, inasmuch as the war demands have sent up the prices of our staple products to a level never before touched in recent years. Prices of Our Produce. ®p nne ' o tiorij it is interesting to not; the values which have ruled in the London market for some of our principal products this season, aa compared with the previous year. Take, for instance, wool, meat, butter, and cheese;— Wool. Mar., 1914. Mar., 1915. ~. . d. d. d. d. bl'jied Wellington „ wools 13 to 15 21 to 24 Greasy merinos 60's 12-1 to 13i 11 to 12 Greasy crossbreds, fino „ 50's 12i.t013S 17 ,to 17J Greasy crossbreds, mcdium 44-4G's 12 ifco 12i 171 to 18 Greasy crossbreds, coarse 3G-10's ... 11 to 11£ 17 to 17i These prices are for "average" per lb. It will be seen, therefore, that the prosent condition of the market is brought about by -the strong demand for wools suitable for khaki and blanket purposes. Frozen Meat. Mar., 1914. Mar., 1915, d. 'd. d. d. Canterbury lamb, per lb : •G}to GJ 7| to 8 North Island mutton, per lb 4 to'ij Si to 6i N.Z. beef, fores, per lb 3£ to 4 5i to Gi N.Z. beef, hinds, per lb 4} ito 4i GJ to GJ Butter and Cheese. Butter (March, 1914), llSs. to 120s. per cwt., (March, 1915), 13Gs. to 112s. per cwt.; cheese (March, 1911), Gss. to GGs. Gd. percwt., (March, 1915), 91s. to 935. per cwt.; and the market for all dairy produce has since improved. j Unprecedented Generosity. "Linketl with the patriotic enthusiasm of the Dominion, .these circumstances, which have placed our people in a position, to be liberal, have inspiyed rich and poor alike to a degree of generosity quite unprecedented, and substantial sums have been voluntarily subscribed for every conceivable department of relief and assistance. Much yflt remains to be done, but we are persuaded tho Now Zealand people will be true to their call and do their duty. "As far as we aro concerned as a board, we consider that under normal conditions wo are justified in regarding ourselves as your almoners only to a 6mall extent, but existing circumstances being so exceptional, we have felt constrained to subscribe a total of .£3050 direct to the relief funds. Wo have also remitted moneys of various relief organisations to London free of exchange, which service has been equivalent to a further large donation, as exchange on London has commanded a very high premium for many months, and still stands at a high level. This further donation, thus indirectly made, is equivalent to upwards of .£IBOO. When wo add to this the halfpay which we are allowing to all our officers on active service with the forces, and which at present amounts to some ,£7BOO per annum, it will be seen that we arc making a large contribution for war and . relief purposes. We have no doubt, however, that, in the circumstances, our action will receive your hearty. endorsement. Local Bodies' Loans. "With the closing of tho London money market, that fertile channel of supply of our local financial requirements, has become absolutely sealed. We have consequently no loau llotations to chronicle on this occasion. For the information of those local bodies who may have' schemos of expenditure in prospect, I may say that, apart from the uncertainty of the war's duration, it is in my opinion exceedingly unlikely that the London money market, even after the termination of hostilities, mil become favourable for the issue.,of loans for some time. Tho demand for capital to make good the destruction that has been wrought war will be enormous, and the sources of supply will, to some extent, have run dry. It is, therefore, only reasonable to assume that it may be some years before the,- financial equilibrium is restored and normal conditions again prevail. In .any case, when considering the question of loan flotation borrowers will no doubt have to re-adjust their ideas as to rates, for when London loans again become possible there is bound .to be a great rush of applications, and this naturally will -result in lenders demanding higher rates than those which in Tecent years they have been ready to accept.

Why finance is Easy. "The New Zealand quarterly average banking statements indicate an easy financial position in the Dominion. Comparing the figures of. March 31 last with those of March 31, 1914, we find the following differences in the aggregate averages of all the banks:— DEPOSITS. ' JB Interest bearing—increase 316,029 Non-interest bearing—increase ... 2.452.961 2,798,990 ADVANCES. £ Discounts —decrease 382,690 Other advances—increase 384,324 Net increase 1,634 Improvement during the 12 months in the position of the public with the banks 2,797,350 "The Post Office Savings Bank figures show a similar large accretion of funds. The excesses of deposits over withdrawals, for the half-year ending March 31 last, reached the large total of £1,188,071. The improvements have been contributed to largely by (1) the increased valno of our exports, and (2) the reduced value of our imports— tho margin between which will probably be found, when»tho returns for (lie year ended March Sl' are complete, to be the highest that has been touched for many years past. "For the year ended December 31 lasttile latest date to which complete returns are available—tlie figures are:— RxpoTts (excluding specie) »C2G,2n3,!)n0 imports, ditto 21,111,000 Surplus exports 5,109,700 "The surplus for Hie previous year ended December 31, 1913, was jC1,1aG,731. The increase in tho exports is due in a largo measure to the enhanced [.rices commanded by our primary products "The decrease in imports is allribulablo to soveral causes:—(l) The caution exercised by merdianls on l , importers when ordering supplies in llie early days of the war. (2) A lessened demand consequentupon the more economical styl" of living that has lwen in vogue since Hio war be£an. '■).! The impossibility of obtaining' many line* oT metvliandiw from flot'iiwnv and Austria, and tho inability of Dritish

manufacturers and exporters to fill orders. (1) Tho lack of tonnage mid the difficulty of shipping owing to congestion at the London docks. "Tile export figuros for the quarter ended March 31 are available, and amount to £11,205,000, as- against £9,993,100 for tho quarter ended March 31, 1914. The import figures for the same qiarter are however, not complete, but the Customs revenue for the quarter is said to amount to only £737,000, as against £935,000 for the quarter ended March 31, 1914, showlug that thero has beer a substantial tailing oft ill importations. This is, of course, all in the direction of widening tho margin between imports and exports thus increasing tho credit balance on tho Dominion's trade as a whole, and, consequently, tho funds available, here. Calm before the Storm? "A statistical comparisou of the trade of New Zealand with previous years would be apt to be misleading, bectuse of the great disturbance caused by the war. The difficulty of importing gQods and the advances in prices on the one side, and tho high prices for exports on the other side, uiafco an examination of the position almost impossible, for w© have always to bear i,i mind that after the war drastic changes _will Tho values of some' commodities must necessaril/ decline, and others will probably advance, and a new "ew must be taken of the situation. Financial ease is apparent, but it is ease which, like the calm before the storm, may presage strain and stress later on. The accumulations in the hands of the tanks are undoubtedly due to apprehension with regard to the future, and a deBire on the part of the depositors to be prepared for possible eventualities. This is clear from the fact that the increases la deposits are principally in the interest bearing class, i.e., the current accounts. This is not an encouraging feature because it indicates to some extent commercial and industrial inactivity. Building, except in the way of Government undertakings,, is luigely at a standstill; and investors are disinclined to enter into commitments. Business on the Stock Exchanges of the Dominion is also very restricted. At the samo time, prices of shares in regular dividend-paying financial and industrial companies stand at a satisfactory level.; and shares are well held, there being few sellers. At the commencement of the war a sharp decline in market values occurred, but as confidence returned recovery became rapid, and to-day there are few stocks in favourite companies which can be purchased to yield more than 5 to 6 per cent. Export of Meat. "The export of meat from the Dominion, otherwise than for the. British Goveernment, is liow prohibited. Early in tho year tho New Zealand Government, acting on behalf of the Imperial authorities, cominnnitoored the whole of the meat in store and all future surplus for export. The meat is purchased on the basis of a fixed .tariff which gives reasonably remunerative prhes, while at the same time it prevents exploitation of the Imperial Government and of the British consumers by speculative buyers. It seems to me that a similar scheme, controlled by the. New Zealand Government and worked probably in co-operation with the British Government, would be effective to put ft stop to operations by the American Meat Trust in this Dominion, should any dangerously aggressive action hero be attempted by tha Trust after the close of tho war. The Outlook. I think we may look for a continuance of good trade. Ifhe end of the war may be followed by hehvy taxation and unemployment in those countries now engaged ■in hostilities, but New Zealand is still bound to find an outlet at remunerative prices, in. Great Britain, tho Continent of Europe, and the United States of America for her wool,, frozen meat, dairy, produce, etc. It would, of course, be unreasonable to expect the abnormal rates at present ruling for the articles enumerated, but there is little doubt that tho demand which will then exist for our primary products will enable us to face the future with equanimity, and assist us in discharging tho heavy liabilities we havo directly undertaken in connection with the war. The war is costing the Government a substantial sum, and I. am convinced that prudence and reasonable economy are being exercised in tho expenditure. The, cost of. the war must be met by increased taxation, and no doubt we may expect to havo proposals submitted under this head in the course of a few daj-s. The country is wedl ablo to facb this increased taxation; indeed, looking at all the circumstances, it was never better fitted to stand such a pressure. ■ After the War. "Some change in the incidence of trade is certain to follow the rupture of the old commercial relations occasioned by the war,' and new trade routes are already being pricked out on the map. Germany, for long years to come, will, I hope, be iommerciallj ostracised. The trend of public feeling thb world over 6eems to point in that direction. New outside markets will therefore have to be exploited, and fresh industries within the Empire itself established and developed. Japan is already in the field, and quite recently a distinguished deputation visited, the Dominion with a view to opening up fuller trade relations between the two countries.. There is a possibility of an early inauguration of a direct steamer service with Japan. Already the trade of Australia and New Zealand'with the United States of America and Canada has taken a forward bound, largely encourged by the opening up of the I'aiiama Canal. Large shipments of wool and concentrates have been made from New Zealand and Australia to Boston and other American ports. Wellington will be a frequent port of call—for coaling and other purposes—on this new trade route. The trade with tho United SStates is bound to develop, and it is the duty of our merchants to help in the development, at the same time taking care that the pernicious American system of combines and monopolies is not allowed to obtain a footing. Trado with Canada, too, is destined to grow, and it is. not unlikely that closer political relations will be established with the sister Dominion after the close of the war. China and Russia are, commercially speaking, lands almost unknown to these Islands, but it is fairly certain that they will not long remain so; and when we come to reflect upon their immense population and their boundless resources, the trade possibilities opened up appear to bo illimitable.

A Happy Prospect, It is noteworthy that the wars of the ( early part of the nineteenth century laid I the foundations of the peace upon which the phenomenal social and industrial developments of the later part of that century were based, and now, in this twentieth century, history may repeat itself; and when tlio knell of militarism has been sounded, and the nations have turned their energies again to the arts of peace, developments as yet undreamt of may take place. The neit hundrd years may witness the attainment of stages of further progress in arts, sciences, industries, social conditions and international relationships which shall outstrip even the nineteenth century record, and present contrasts with existing conditions more remarkable and important than those of any of the centuries of the past. Mr. Martin Kennedy Speaks. Mr. Martin Kennedy congratulated the chairman on the magnificent speech that lie had delivered, and the fjreat interest he had displayed \in providing such a large amount of information, which must bo interesting to shareholders present and absent, and to the public generally at homo anil abroad. Ho was quite' sure it would bo read with 'satisfaction, and also bo of great information. ''Tho chairman," ho contiuued, "has so fully reviewed the conditions that there seems little left for 1110 to add, beyond a word of congratulation upon the 'position in which tlip hank stands to-ilav. I cannot pas?, without special comment, Hie fact that the reserve fund of the bank has now reached the ,£2,000.000 mark. T may remind you that, as mentioned by the chairman, ,£.165,5:10 of this amount represents premium received on the last share issue, of which ,£135,000 is premium paid by the Government and premium paid by tho ordinary shareholders. _ . "1 would also like In mention that 1 was at one time strongly imposed to tile Government beinu permitted (o taico np liny shares in the bank. Circumstances have,' however, led to a radicnl change in my view; in thi.\ rcsncct, and 1 am now prepnred to admit that the combination with fcho Gnvamwsnt Is s. hß.pp.T one and calculated to achieve the very host ro

suits, both for the bank aud for tho coun- j "Before resuming my seat I would like to remind you that luy present term of offico expires at March 31 next, and that it is my present intontiou to offer myself for re-election at tho half-yearly general meeting in December next, when I trust you will favour mo with a renowal of your confidence. 1' may mention that, 'this year, I complete my 'majority' as a director of tile bank. On September 26 next it will bo twenty-one years since I was first elected to tho position, and ddring tho whole of tho intervening timo yon have maintained mo uninterruptedly in office, always re-elect-ing me unopposed. I confess that, when I look back over those years and contrast the position of the bank to-day with that in which it unfortunately stood twenty-one years ago, I feel a pardonablo pride in the change that has been effected. Tho march of Time is fast carrying mo on to tho point at which I must of necessity retire from some of ray directorships, but tho bond that has been forged by my twenty-one years' association with this institution is. a strong one, and while I continue to be honoured with the confidence of my fellow shareholders, I shall endeavour to hold my services at their disposal as long as I feel myself capable of discharging satisfactorily the trust which they commit to my keeping." The Guaranteed Stock. Mr. S. Kirkcaldie said that it was with regret that he was not able to accord that appreciation to the balance-sheet that ho would have liked to do. The first item of the balance-sheet, that of reduction of the Government guaranteed stock, was one that took a great many shareholders by surprise. The million pounds guaranteed stock was a safeguard <ind consideration in a large measure for the ordinarystock given, and it was disappointing to see at such an early stage that a reduction had been made. The capital account for 1915 showed that an increased capital had been made of .£525,541, and the profit and loss account showed a reduction from £291,000 to £270,000, a reduction of £21,000 on that account. ~ He also drew the attention of the board to the fact that the 1914 balance-sheet showed a Teturn of 8 por cent, upon the capital invested, while this year it was only a fraction over C per cent. It was satisfactory to know that the bank was in such a strong financiul position that it was able to keep np the payments to shareholders, and that it could contribute £34,000 to the reserve fund, but that was only half what the board transferred during the past two years. The information thj chairman'had given, that the bank was going in for a large increase in their building, he thought might be taken into consideration by the Board of Directors, to see whether it might not bo deferrid for some time to come. Tho amounts written off buildings during the past ten years had been substantial, and . the amount this year, •610,000, was substantial, but until the agreement between tha hank and' the shareholders, so far as capital was concerned, Was fully observed, the bank reserves should be reserved in tho interests of the ordinary shareholders.

Bank Policy Supported. Dr. Prendergast Knight 'said that he thought it was an advantage that the bank should not pay much premium for the renewal of the guaranteed stock. There ~vas no doubt if tho bank had bffered the shares to London underwriters they could have got the whole lot subscribed. He understood that the men who subscribed for tho half-million that was renewed were stockholders before, and it was done at no cost to tho bank. l The chairman: That is 60, Dr. Prendergast Knight continued, and \aid that he thought the stockholders in renewing their stock for half a million, vithout cost, at such a time showed the public confidence which existed in the bank. With regard to expenditure on buildings, anyone who moved about New Zealand would' know that the bank was extending premises in the right direction. He had much pleasure in welcoming Mr. Reeco to the directorate. He thought that they ought to bo satisfied vith tho reserve capital of the Hank. Mr. T. S. Weston said he did not think tha criticism of Mr. Kirkcaldie could be sustained by the actual position. Be did not think that it would be wise for the bank to pay interest at 4 per cent, on such a large sum as a million, and tha reserve now. available would, he believed, prove adequate to meet any emergency that might arise with regard to the profits of the bank. Mr. Kirkcaldie had apparently not realised that there must have been considerable writing down of the bank's holdings in Government and other stocks. This amount so written off was bound to eome back to tho shareholders later. No doubt the value of the landed properties and buildings belonging io the bank seemed to bo larger than the amount in somo previous balancesheets under this head, but the bank had purchased many properties in New Zealand aud elsewhere to cope with increasing business. He would like to know from the manager what were tho land tax values of the bank's properties compared with what they were, say, five years ago. He congratulated the management on the way they had brought the bank through the crisis, and he believed the action of the bank in treatment of customers had done much to ease the financial sit'uaition in New Zealand. He thought they should all be pleased rather than dissatisfied with the result of the year's work. Mr. Beauchamp Replies. . The chairman, in reply, argued that it would be exceedingly bad business to pay i per cent, interest on the full amount of guaranteed stock, while the ruling rate for short call money in London amounted occasionally to only 1 per cent, per annum. He also explained that prior to the maturing of tiic old debentures an offer was made to the bank to underwrite -the whole of the new issue at 1 per cent. This commission would have amounted to £10,000. The board, however, decided not to accept this offer, hut to proceed to renew .by direct negotiations. By this means they succeeded in placing no less a sum than £58,988 at no cost whatever to the bank. This was an achievement of what the board considered it had a right to be proud. The diminution in profits was easily explainable by the large amount that was required for depreciation in gilt-edged securities. Had the times been normal, the bank, out of the profits of last year, would havo been able to place to reserve a larger sum than it carried to reserve last yeav. Thia would give some indication of the amount required for the writing down of the gilt-edged investments to the rates ruling on the Stock Exchange on March 31 of last year. The reduction in profit under tho head "bills discounted" was explained bj the fact of financial ease-now obtaining in the Dominion This financial ease was abnormal. Indeed. a London financial authority had lately referred to a condition of 'dangerous 'financial ease." Most people were now quite properly carrying on their business on conservative linos, and consequently did not need accommodation which they might require if they were extending their business. . This was clearly shown by the great increase in the indebtedness of the bunks to the public, for as he pointed out in his speech this amounted to no less than £2,795,356. In the 1915 balance-sheet the value of land, buildiugs, furniture, and stationary was set down at £151,507, tho value of land and buildings alone being £420,208. The manager's valuation of land and buildings, and these valuations were invariably conservative, was £751,708, and the land tax valuation £777,306. The book value of landed property and premises in 1905 was £333,421, but in the meantime the bank had spent very largo sums in land and buildings. The motion was carried. Vote of Thanks. A rote of thanks to the directors and tho staff was proposed by Mr. John Mill, of Port Chalmers, seconded by Dr. C. Prendergast Knight, aud carried. Mr. T. S. Weston suggested that at the end of the war the names of those ofiicers of the bank killed in tho war should be inscribed on a tablet to be kept in the board room, so that the roll of honour might be preserved for all time. The chairman assured Mr.Westnn that when tho end of the war came tho suggestion would have consideration.