BANK OF NEW ZEALAND

Dominion, Volume 13, Issue 227, 19 June 1920, Page 8

BANK OF NEW ZEALAND

YEAR'S OPERATIONS REVIEWED

DIVIDEND INCREASED TO 171 PER CENT.

FINANCIAL & TRADE PROSPECTS

,Y 'j '; 'The annual meeting -of;proprietors of i['; ;, the Bank of ;New Zealand was held yes- ;•: , terday. The chairman of the /Board of r/;;: ;: Directors (Mt. Harold Beauchanip) pre- !'•■'■''■;'■' ! sided, and other direotora-present were, $>-. -.'Messrs. G. Elliott, W. Eeece, E.' W;. i> V ■ Kane, iW. Watson, and J. H; Upton. ;>'-'-.J-.'.-,'.; ...There .was an unusually large attend;i::;.:- nace of shareholders. Mr. -H.. Buckle-. X:/.;"'[ ton (general-manager) and Mr. E. W. %•:'.;■;. Gibbs (chief auditor) '■were.also present. £■•■.>•• Tie chairman, in mon'ng their.adop-, i ._ tien, said:— [..'■''.■''."" Copies of the report and balance-sheet ;!.-.... nre in your hands, and I will now toC.-■■■:- ■■ ■ mark upon the various items where K: • fluctuations in the figures seem to call I for any comment from me. if-v . CAPITAL l : l 'l : )-- 32,627,441. .Increase ~£347,453. ... , '•'. This increase representerthe ..amount I. , paid up by shareholders in advance of ?'.'■'"." '■ due dato in respectof the call made.on :■>..■■ January o.last on ,tho ordinary'shares ;-'.": Nog. 1 to 150,000 inclusive, !the cirV '■,'. " .eumstances and conditions of which were :-' mentioned at our .meeting on Beceinher k : ■ :12 last. It will he seen that a large number of shareholders availed them- •:.'':}:'-\ wives of the option allowed them of Ji.':'..,'. ' paying up the amount of the call be- £,,,.:: fore tho due date (April 1) under re- ?•:;,-; hate 'at 5 per cent, per- annum, the i' : , 4-./• whole call, with 'the exception of i:', £152,516 135." 4d., having been received i'i at the balance date. I may mention i:.: : that of that amount only 344,261 re-' ;.'■'.•>..'•.'.. ' mained unpaid at 2nd instant, Our isi,j'>,'fv;: :sued ordinary capital is now .£1,500,000' i.Vs;.' nnd the amount paid.up, in respect ■.:,•- thereof, at 2nd instant was ,£1,455,739. >l iv.- : RESERVE FUND =..■:;•■■ ',£2,350,000.: Increase 3150,000. This increase is the amount added to •;..' the reserve fTom the profits of the, year I /-, ended March 81, 1919. As will be seen :; by , the .report-in your hands, we now ;',; ■ propose to increase the TeseiTe fund by K another ,£150,000, making the total. !/; v:- ;; - 32,500,000. NOTES IN CIRCULATION ',■.; 35,705,337. Increase : [•' -.;"•';■■ . The greater part of., this increase is :,-. represented by notes not "circulating" 'f ■ '.' at all in the .sense of, being in the [': hands <jf the public. They are notes ■•". ;, _"- of ; . onrij in tho -hands of other. New h':.' : - Zealand banks, paid to them in 6ettle- : '■■: y.- ment of exchanges. During the period f-V; ."'..' of the commandeer the' transfers of- |.: ;■ Government.moneys in payment of pros' .. , ,duco have passed through us as the ;,;■• -'%'. Government's bankers, .and large ];■■■■ '-'•'■ amounts have,.as a consequence, occn- ;' / _ . sionally ,to' be paid over in settlement. i _ .VC Adjustments are made with other banks f■■'..,. ",'■'; at short intervals by-paying in London ;. j ,:r...in.redemption cf notes issued to other j, ■-.■■<■ ■■:- banks in the Dominion. Sometimes, ,■',' ' ; y particularly. when a local war loan has ;;.-•; '•' been raised, the balance has been turned j in our favour and we have been holders !'•-. of other bank settlement notes, but at !.-•'',;... present the balance 19 against us, hence '■';. ' r - the large increase shown. I mention i: the matter in order'to guard against ' • fiuy misapprehension arising in regard /.- to undue inflation of the New Zealand ;: . currency. I do not think there las been any such' inflation,here. Such inJ!■;•; ; crease as has taken place since 19U in j■ :" the volume of notes'actually in circulation is, I think, due principally, to .v.-:- '.'. the-fact that gold, which people 'used ~'. to carr/.. about or keep by them, has !; .■ ■ found ltd way into the banks and has ;\ been replaced by bank notes. I would ■■'.• point out that, the gold'actually held ,:\ ',. by the banks in New j Zealand is sum- ;.;■■ , went to, cover all such, notes actually in '■■.: J,'"•■..' circulation.. The New Zealand note eur- ; ■■" ' rency therefore is on an unexceptionable ! •',"• basis,-being fully represented by gold !, on hand; and while it may at present i .''•;■ '" \l slightly .redundant, it cannot, while ';•. ttat position continues, be regarded as f; ■ ''■:... inflated.. Magnitude does ivot neces- [:. ' farilr imply inflation. . l'--.'/ ; r ; '•';•■ DEPOSITS £.'■''.". Increase c;,"..'. This increase reflects the prosperous !,:• : condition of the country, and.will be f;. „• i'.. more fully dealt with at a later 6tage iy ■-'. of my-remarks. I BILLS PAYABLE ANb OTHER LIABILITIES. j* • Increase 3847,915. "; . 'An ordinary fluctuation which calls '-'. for no special remark. . i' RESERVE FOR TAXES '■': : : ; :: ■ 3340,000. A new item' in the balance-sheet, although not entirely a new provision, since in view of the very heavy liability ;• . to which the bank is'subject for'tasa- > ■ ■ tion, it had been deemed prudent to j' . accumulate a reserve against it. This I ;'; reserve is '6ufiicienti?to cover tho estimated liability for one year in respect |;'..; ■'.' of income tax, and it has been decided to show it as a separate item in the V- ' Valance-sheet. While .referring to this wbject, I might mention, as a matter • ol interest Ito shareholders, that the r ' bank paid the following amounts during %t year for rates and taxes; ''."''. £ I Income tax 285,382 , !■'•'".. Land tax 17,123 j '<• •'. Tax on note circulation 140,074 ■ i Entes 7,904 ! > Total 450,483 j Turning now to the assets side of the '• balancp-eheet we have: ! ASSETS j Coin and Cash Balances, Government I Notes, Legal Tender Notes, Bullion— ;■', Total 38,772,285. Increase 32,052,520. I. Coin, cash balances and Government ■ : "■" notes show a lai'go expansion. Legal ten- [ der note 3 and bullion a moderate redunti. tion—leaving the net increase as above. {"■' Money at Short Call nnd Bills Kccciv- '-.'. able in'L0nd0n—320,283,642. Increase, V 3C,4G5,587, This increase represents ,' roughly tho growth that has taken place i ■, during the year in tho colonial deposits. V As explained in my address a year ago, ■ these: funds aro held in gilt-edged sey curities, readily realisable at any time. y, : In ordinary times our exchange operai. '"• tions with Britain and those with for- [■'■ eign countries which have to be settled j in London approximately balance one !■' another. Taking tho transactions of a = whole year, there is'no very grent dif- | ". 'ference between tho amounts which p - receive in London and those which we .. pay.out thore. During the. last few •' '." years, and especially during the r year which has jnst closed, the vnlno of our exports which: have been paid for in London has very greatly exceeded the' ' r: ; cos'; of imports and other payments which \\ .have been made there. The tendency f 'Jeefl therefore been towards taxiccumu-

A NET. PROFIT OF £419,046

CHAIRMAN'S > INTERESTING ADDRESS

DEARER MONEY & NEED FOR .•■'ECONOMY

lation of funds in London, and tin's is the explanation of our now holding so largo an amount at that point. In accordance with our usual custom, provision -has-been made for the writing.down of all our London investments to a.figure at which, they are readily realisable. Owing to the increased value of money in London, the funds we have employed there have been-yielding a verv satisfactory teturn.

Investments in the 764. Increase, .£548,602. This increase is occasioned by the bank's subscription to the last Kewi Zealand Government Victory, Loan. The. assets included under this and 'the two previous headingscoin, etc., and money' at short call, etc. —are equal to 69.75 per cent., or roughly 13s. lid. in the pound, of the. hank's liabilities to the public. Commonwealth and Fijian Government Securities.--C259.317. Increase, jQ105,001. The increase represents further investments made in the loans of the respective Governments. Advances total—'. Bills discounted ',£1,502,233 Inc. ,£20,483 Advances £17,929,615 Inc. £533,823 J819.431.848 .0566,311 This increase is comparatively email. The circumstances which, have contributed to make it so moderate will be referred to at a later stage of my address,

Lauded Property and Premises.—«£3Gl,103. Decrease,' £38,759. The sum of £50,000 ihas again been appropriated from profits in reduction of this account. It is this appropriation that causes the decrease shown. The usual outlay in respect of repairs, improvements, etc., is of course continually goin" on. Shareholders who have travelled throughout New Zealand and have seen a -good many of our offices will understand that the amount at which the bank's properties stand in our books and in the balance-sheet,is a very low figure compared' with their actual value. The ■ writing6-down for a - considerable number of years >haye been on a very liberal 6eale, and I think it probable that for some time to come it may' not be considered necessary to make further appropriations for this purpose. Some figures were recently, published in one of the banking journals stating the proportion which'-the item "banking preniises" bears to the capital and reserves in the case of a considerable number of banks tluoughont the Empire. These figures show that in the case of 22 banks in the United Kingdom the bank premises represented 20.93 per cent, of the capital and reserves/In 17 banks in Australasia, the proportion was 14.48 per cent. Eighteen banks in Canada ; had 26.30 per cent, of their capital and reserves represented by this item. Comparison with those figures will show that the 7 per cent, of this bank's own resources which are thus represented is an unusually small proportion, and that it cannot be said that we have an nrfduly large part of our funds "locked np in bricks and mortar." • PROFIT AND LOSS. Tie neb pwßta for the- year are ■£419,0-16 as. compared, with £388,022.' at March 31, '1919. 'l'his is after paying interest on tiie guaranteed stock, making the usual! grant to the Officers' Provideut l?ivnd, and also providing for a special grant to that fund of £100,000, paying bonuses to- tha Bttiff, writing ••050,000 o/f premises and furniture account, and rnaking all the necessary provision for bad and doubtful debts and also for depreciation in the value of other assets.

The amount brought forward from Jast year was ,£146,224, making a total of ■£460,270 now to be dealt with after providing for tlio ,£105,000 disbursed in the 6 per cent, dividend of December last. It 18 now proposed to pay a fnrthei dividend of l\ per cent, and a bonus of 4 per cent, on the ordinary and. "B" preference shares (making with the Docomber .dividend already paid ITi'per cent, for the year), and a further i per cent, on the "A" preference shares (making.lo per cent, for the year). This will make the total dividend and bonus fof the year ,£208,750. Of the i.alaac:e remaining, ,£296,520, we propose to plate ■<£150,000- to credit of the Eesorve Fund, and to carry forward tho residue, ,£140,520, to the nest account. DIVIDEND. In view of the increase in the amount avaikbfe for distribution, after making ample provision for all contingencies, the directors have felt justified in proposing ,a small increase in the rates of dividend and bonus on "B" preference and or dinary 6hares. It is,\ therefore, recommended in the report now submitted to you that the total distribution for th« year upon these shares shall be 17i pel cent., instead of the 15 per cent, which has been paid for the iast nine years upon the ordinary shares and upon tho "B" shares since they were created in 1914. AGGREGATE ASSETS. Before passing from my review of tho balance-sheet figures I desire tc direct your atteution to the fact that our aggregate assets are now nearly ,£53,000,000, the increase during Hie year having amounted to ,£9,699,259. BOARD OF DIRECTORS. . Tho members of the board appointed by the Government, whoso term c.f oilicei expired on March 31 last, were Messrs, AViiliam Eeece and David J. Nathan. It is with great regret that we have to record Mr, Nathan's sudden death on March 20. He had been a member of the board for three terms of two years eaoh. Hie wide experience and lusiness knowledge made him a- incst useful director, and his valuablo ctuusol .was always made freely available to his colleagues in their deliberations. Tho vacancy caused by Mr. Nathan's death' has been filled by tlio Government appointing Mr. George Elliot, of Auckland, who is widely known in business circles, a director o'f the bank. Mr. Efliot is with ua to-day, and I have pleasure, on my own and your behalf, in extending to him a cordial welcome. Our old colleague, Mr. William fioeoe, has, I nni pleased to say, been reappointed a director. These appointments are for a term of two years from March 31 'Inst. : We again placo on record our high appreciation tf the care.and attention devoted by the London Hoard to tlio bank's business there. The personnel of that board remains unaltered/ GENERAL MANAGEMENT. Mr. William Callendcr, to whose retirement, after a service of fifty years, reference was made at our last meeting, relinquished his duties on January 31 last, and Mr. Henry Buckileton assuniwi the position of General 'Managor on J'eruary 1,

STAFF. WJißn we met last year, I referred at f/jnio length to the relations between ' the bank and its staff, and informed yen that during recent years tho sale of our officers pay had been considerably improved,, and that, to meet tho e\ceptional circumstances of tho times, -substantial 'bonuses were being paid to ali our staff, a diffcrenco being iriado in favour of married men and others with dependents. As tihe cost of living showed no sign of coming back to what ve rave been in tho habit of regarding rs normal 'figures, tho board decided some timo afterwards to have a cctmp'.ete review and revision of all salaries. The pay of every mole member of tho staff came under consideration, and the salaries of all were mnteria/.ly increased, tho increases granted to the men -vlo wen) drawing the smaller salaries being greater in proportion than those given to tho more 'highly paid members of the staff. These alterations in tho scale of pay re> suited in a large annual addition to our charges. Substantial as this amount \>as. the tawd have Mt that, in view of tho steadily rising cost of tho principal nec«s•snries of life, it could not bo regardod as final, and a further review of the posi Hon has now been undertaken. As far as tho younger malp members of the staff are concerned, this has ..just been completed, and has resulted in a very substantial increase of pay "being gianled to all the less highCy paid cf these youns men. It will doubtless bo of ' interest to you if I quote the scale which we .have just adopted for tho payment of oui young men during the first ten years of their service—a seals which is not rigidly adhered to, but is subject to increase in cases of exceptional merit. It is as follows:— j First year •. 85 Second year : 100 Third year 120 Fourth year 145 Fifth year .' 170 Sixth year 210 Seventh year 225 Eighth year 240 Ninth year 255 Tenth year 270 It will be seen that a youth: who join's our 'Service, as ib usual, at the nge of 16, may expect to be drawing a salary of at least ,£2lO when he reaches the age of 21. I may add that, out ,of rast year'a profits we have paid a bonus of la per cent to married members of the staff, drawing AtDD a year or less, and 10 per cent, to all other officers. As thtis bonus was based upon the revised salary list adopted in October, 1919, it. amounted to a considerably larger -aura than similar bonuses in the past. While treating thus liberally all the members of the bank's staff, it is the constant desire of the board and of the executive to discover those in the bank's employ who possess special qualifications, and I feel no hesitation in 6ayiug that there never was a time when tho bank's service afforded greater opportunities than now for young men of more than average ability who endeavour to qualify themselves for the more important positions. PROVIDENT FUND. In fulfilment of a suggestion which 1 made a year ago, the board have now arranged to make to the Provident Fund, in addition to the usual annual grant, a special grant of .£IOO,OOO out of the profits of t!ws past year. This is by far the largest amount -which the bank has ever contributed to the fund which provides pensions for the staff, and it lins enabled the scnle of pensions to be very material■ly increased, so thnt an officer who has served tho bank for 4© years or more will receive an annual pension of 75 per cent, of the average salary paid to him- during the last 25 years of his 'service, instead of 75 per cent, of the average of 40 years. The minimum pension for those who have completed a full period of servico is being increased from .£l(3 ™ *-™: and the maximum pension to .£7OO. It has afforded the board great p ensure to be able, on the shareholders behall, to provide for this material improvement heiii" made in 'the provision for the old age or disability of those who have served the bank during the years of their; ■workin" life Tour cordial approval is conficfentiT anticipated. As the .increased scale of pensions did not come into effect during the past year, the directors have, out .of the bank's funds, supplemented by <v bonuß of 10- per -cent, the pensions which were drawn last year by retired officers or by widows _. Here I -would like to express our warm ; appreciation of the loyal and efficient services rendered by our staff in New Zealand, Fiji, Samoa, Australia, and London. . _ ~ GENERAL REVIEW. The observations I have made compile the necessary review of the banlcs affairs and of the of the and, before moving the.adoption of the . report and balance-sbteet, I now accord ineto my usual custom, proceed to take a brief review of the general situation.

NEW ZEALAND FINANCIAL POSITION.

New Zealand has enjoyed a series of rears of solid prosperity, and. although the- {acts and figures have been presented ,n various forms, it will not be amiss to reproduce some of them in order to Imphasise the point. The hanking eturns for the past quarter reflect the Son very clearly. The free and Ted deposits disclose remarkable movernents. The fibres for a series of years are as follows- , Free Fixed totaL March deposits, deposits. deposits.

As compared with lM the total deposits We mote than doubled, but the cain is mainly in the free deposits-i.e., tho current account balances, which show an increase equal to more than 150 per cent The fixed deposits have increased by about 50 per cent. In the six years 1914-19 the deposits increased by J314,800,000. while in the past year, the gain is nearly The phenomenal growth in the last year is probably attributable in great measure So the exceptional'and largo disbursements-up- " wards of by the Government in connection with the repatriation of soldiers, which, must have increased bank deposits to a very substantial extent. It is also due,, m some deereo/ to improved shipping facilities which have enabled a larger quantity ot ■produce to be realised upon by exportaTh'e returns of the Post Office Savings Bank afford evidence to the -nme effect. The figures of the Savings Bank deposit accounts for the same period are as follow—

We understand that for the year ended March 81, 1920, this amount has been considerably augmented, .but to what extent we are not in a position to say as the figures have not yet been published. The discounts and advances of the banks have grown to a moderate extent March Dißoountß. Advances. * Total.

In the six years the advances andl discounts combined have increased by the moderate sum of .£8,375,292. In the last year, a decrease is shown. A glance at the figures of the country's commerce throws a clear light on the causes of the movements in deposits and advances as above disclosed. Our exports and imports have been as follow :— • Excess of oxportß

of exports over imports has been exceptionally large. In the six years 1914-10 the exports have exceeded the imports by the huge sum of 4)60,559,581, or an average of over 4)10,000,000 a year. Here we Tiave disclosed a further source wlienco banking deposits have been replenished

and advances reduced or Tendered unnecessary—in short, the explanation of the present easy local financial position and cf the prosperous conditions generally prevailing in the country. But lio would bo.a sanguine man who would affirm that similar conditions will prevail over "tho next ensuing six years. A continuance of such prosperity cannot bo expected. It depends, upou favourable world conditions, 'the prospects for which are at the moment, not at all encouraging. PRICE LEVELS. Tho question of the cost of living continues to lie a "burning" ono, and tho fact that prices have continued to riso notwithstanding the conclusion •of hostilities and the return of the fighting men to peaceful avocation, is leading many to wonder how long existing price levels are likely to bo maintained. Some there are who affirm that high prices have come to slay, but in that view I cannot share, though I admit that ; the .rango of future prices may b« somewhat higher.than before, the war. In tho Napoleonic war English prios toss 75 per cent, and they took eight ,rt"t«ra to .become normal again. In the American Civil War prices rose 100 per cent, and took over twelve vears to become normal. How long it will take 'on this occasion to reach normality would be impossible for anyone (o forecast, but it 6eems obvious that tho process of deflation has set in. In America, Japan, and, to a lesser extent,' in Great Britain, prioes of commodities have already slumped, the speculative fever has been curbed by tho banks re striding credit, and financial crises have resulted. The changes that have taken place in these countries aro bound to have far-reaching effects.

In the matter of regulating prices, some people are disposed to look for relief to Government intervention and control; but While, as a temporary measure, good may result therefrom, it is fairly certain that no permanent relief can be- secured in that way. The gen< erally accepted view among people quali' fled to judge is that tho less Govern.' ment interferes with trade and indus 1 try the bettor. This principle was well enunciated by Lord Macaulay over half a century ago' when discussing suggestions that had then been made for Government control of and assistance to trade. He remarked: It iB not by the intermeddling of the omniscient and omnipotent State but by the prudence and energy of the people that England has hitherto l>eon carried forward in. civilisation; and it is to the samo . prudence and the same energy that we now look with comfort and good hope. Our rulers will best promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital .to find its most hicrativo course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by, diminishing the price of law,'and by observinc slrict economy in every Department of the State. Let the Government do this; the people will assuredly do the rest. These views still find general acceptance among the political economists of our day. SUGGESTED REMEDIES. In searching for remedies for the existing evils wo naturally first mako ah endeavour to seek the causes of the evils that wo wish to .remedy. There we 'find durselves at ot>ce on debatable ground. One school of economists maintains that currency inflation is at tho root of nil jiriee . inflation. Another school affirms that price inflation is solely the result of the operation of the ordinary laws of supply and demand. For my part, I am disposed to attribute the, appreciation in prices, from which the world is at present suffering, to no single cause but to a variety of causes, including both of those just m/mtjioned. The question is a very complex one, because a multiplicity of influences are at work to bring, about the result arrived at. each exercising a varying degree of effect' according to varying circumstances and the nature of the commodity concerned. It would certainly be wrong to ascribe to any ono particular influence the whole responsibility for the unenviable 'situalion in which we now find ourselves. But in looking for remedies, as wo undoubtedly must if we are to rcstoro ourselves to moro tolerable, conditions, wo can see broadly individual.influences which tend to the perpetuation of price inflation, and if these lie dealt with and removed, even though only one by ono, we shall be assured that we are gradually traversing the road which will lead ns back to more reasonable price levels. Among these remedies tho following unmistakably take primary place:—

(1) The exercise of the strictest economy in public and private expenditure.

(2) Honest effort to increase production to the utmost possible extent.

(3) Encouragement and development of every class of industry and uncompromising discouragement of all speculation.

(4) Deflation of the world's currencies, which will to a large extent result from the application of the three remedies first mentionnd.

LABOUR AND CAPITAL/ Upon our national industry our whole national life depends. A certain standard of production united to a reasonable method of distribution are the first requisites of a nation's physical and moral well-being. We live by winning from Nature the means of life. Production, indeed, is prerequisite to distribution, for without the-former the latter is impossible. To-day these two great factors in our national lifo leave much to be desired.

An intelligent and sincere co-operation between the two great agents of production—Labour and Capital—is absolutely essential to an ameliorated condition of our people, and .yet that kind of cooperation, not only in Mew Zealand but in the Old World, seems to be diminishing rather thail increasing. Tlio policy of organised Labour the world over is to fight Capital and not to unite with it. The world is confronted with an unparalleled economic crisis. Want and starvation are stalking through Europe leaving widespread death, misery, and .suffering in their track. Unfed and unclothed millions are crying in despair for .food and raiment. Lack of a reasonable measure of comfort is widespread owjng to an insufficiency of the necessaries of life; and before this sad spectacle the .mutually destructive strultjile between Labour and Capital seems to bo growing moro and more bitter and intense. Strikes on the shallowest pretences; ever increasing demands far shorter hours; limitation of output and a conflict growing blindly ever more acute between einnloyers and workmen, seem to justify almost a gospel of despair regarding our 60cial and economicfuture. Never before in the history of tho world have the needs of increased production been more clamant than to-day —iiovcr before were the two partners, Labour and Capital, moro bitterly estranged and antagonistic. I do not say that tho blame—for the spectacle is a sorry commentary on our civilisation— is wholly with one side or the other. Capital has never sufficiently brought to its consideration of tho claims and aspirations of Labour tho lamp of human sympathy. Recriminations and denunciations in the present (great world crisis will serve no purpose but that .of intensifying the* evils. of the estrangement and diminishing tho hopo of reconciliation. "It is better to strive for tho good than to rail at the ill J '—to remedy the cause than to denounce it. GOOD WILL AND CO-OPERATION NEEDED. Two great desiderata call aloud for recognition: First, moro sanity on the part of LaJbour—it shiould ceas'o to bo so immersed in aeitation and so blind to its results; and secondly more genuino evidence of willing co-operation and concession on thn part of Capital. Cntsadw against the soaring cost of living, profiteer-hunting, fixation of prices— tliose ate but symptoms of tho disease of

Along these lines it is our duty to proceed if we wish to hasten a retnrnto more normal conditions, and? I venture to affirm that, if the above remedies wero put generally into active operation, it would not be - long before ,i welcome and substantial change in the situation would become apparent.

a paralysed or arrested production, and the remedy lies in getting to tiro root of tiio evil instead of applying palliatives i" file symptoms. If tho day of radical chaoses in tho structure of our indusiriiii system is inevitable tho sooner it is recognised the better, and the utmost human effort must bo made to find u iust and permanent modus vivendi. Much of the present bitterness between tho two groat agencies must bo due to niisuiider-tauding or simply blind antagonism:, and our unflinching determination should be to dispel these causes by bringing tho parties as much as possible together. I do not ignore the stupendous difficulty of the problem, but it must be faced and solved or national disaster is before us. To this end tho proposal that tho Primo Minister should call a national. industrial conferenco of both .employers and employed is surely a step in the right direction. This would at least disclose moro clearly root causes and. basic differences and open up a possible path to genuine co-operation and industrial concord.

In a land like this, so richly endowed by Nature with all that is neoessary for solid national comfort and happiness; with n. sturdy race of purely British blood and a climate that stimulates energy: it is surely deplorable that industrial antagonisms should so paralyse tho hands of industry and stifle the creation of wealth that many have to face want where plenty should be their lot and comfort their heritage. PRODUCTION SUFFERING. That production in Now Zealand has suffered grievously from (he causes I have indicated no ono can deny, and th« following table is but eloquent proof of that conclusion-.— — Increase Annual or Exports average. Decrease. , 1914. 1915-19. percent. Wool (lbs.) ... 220.472.69 a 214.003,975 2.9 dec. Meat (cwt.) ... 5,229,970 3,475.407, 7.0 inc. Butter (cwt.) 434.067 375154 13.0 dec. Choose (cwt.) R63.776 1,070,935 23.0 inc. Tallow (cwt.) 493,300 500,516 2.0 inc. I'Mcs (NVi.) ... 412.82?. 359.298 12.0 dee. Homj) (tons) 23,928. 26,493 10.0 inc. At the close of 1919 there were in store 126,722,2321b. wool and 2,107,872 cwt. of meat, which, under normal conditions, would nearly all have been exported, and should therefore be credited in (he above table, iu which ease the average lor 19)5-1!) would, in respect to wool, be increased by over 25,000,0001b., and would convert tho apparent shrinkage into an actual increase. But, even after making- all such allowances, the avcrago increases are not encouraging, end, unless a great deal more is accomplished, Hie pinch of "hard times" will! bo felt with some severity. The values of our products are declining,' and, when the imperial purchasing scheme terminates, a new set cf conditions is bound to rrise —a set of conditions that will be full of difficult problems l for bankers, business men, and producers. Wool, meat, talilow, hides and skins have already, receded from the high level readied since tho armistice was signed in 1918. Tho statistical position in respect to most of these products makes it inevitable that, prices must go lower. For instance, in the case of wool, tho quantity in hand is far in excess of the consumptive capacity of the available spindles, and, even if ni'.l the spindles that were in operation prior to the war were in operation now, flic weight of wool would be more tlan could bo dealt with in a rcascnable time. With the embargo placed on -.peculation by bankers the world over, spinners are operating only from hand to mouth and (hey are safe'in pursuing Mich a policy, for the wool is at their call- vhenever lliey require it. Meat, too, seems likely lo present serious difficulties liecauso of Hie enormous quantity in fctore. ' There is not vet sufficient shipping available to clear (he cold stores, and, even if transportation could be arranged, it would not prevent prices from falling. Though sumo of our products may hold to smiething like their present values-dairy produce, for instance—the general ten(leiiev is downwards, and, should the decline be anything like 25 per cent., tho situation would become one of some seriouMiess. i In the six years, 1914-19—tho of war prosperity—the exports aggregated .C202,590,C95, or an average cf .£33,705,110 per annum. A drop of 25 per cent, wculd reduce- (his to ,£25,323,837, and bring ns down to the. level of 1914, when the exports were vcilued at a little moro than twenty-six millions. Such a ■hrinkage would bo immediately reflected in the Treasury returns and, unless the strictest economy is exercised in every Department of the 'State, increased taxation would, in that event, seem to be unavoidable. Businesses which havo been built vp on the basis of inflated prices, and land values that have been rushed upwards on the same basis, would suffer severely in the process of deflation. WHEAT GROWING. At this particular juncture, the growth of cereals—more especially wheat—is the department of agriculture- which domands the most general attention. There is an undoubted shortage in the worlds supply at the present time, and the prospects for tho future aro decidedly gloomy. This Dominion should certainly grow nil the wheat required for its own consumption; but for-several years, it has not been doing so. The area under wheat crop hns tor some time been steadily declining. Ten years ago then were 311,000 acres devoted to wheat, and the yiold was 8,061,100 bushels. last season it is estimated that the area under wheat crop; was only 141,000 acres, and tho estimated crop 4,100,000 bushels.' In view of the certain deficiency in Ihfe world, s supply and the consequent probability of high prices ruling for wheat, it is to bo hoped that our farmers will be encouraged to sow wheat liberally, so that at least our domestic needs may be supplied, it not a surplus made available for export to some of the countries that are faced with starvation. To encourage this industry, we may reasonably look to tho Government to guarantee a remunerative price to producers. LAND VALUES. In several of my past addresses I havo referred to the high prices paid in. this Dominion for country lands and pointeit out the danger of basing land vnlues upon current prices ruling for produce. Similar warnings • have been uttered by others occupying responsible positions, but so far they have gone unheeded, inn buying and selling of land-especially farm land-has proceeded at a rapid rate, and prices of such land, which were thou"bt a year ago to have reached very hi"k°fignvcs. have mounted higher anu higher. It is no doubt a matter of commo°n knowledge that many of these transactions are carried through on a very small cash payment, nearly tho whole ot the purchase money being represented by a mortgage, or a series of mortgage,?, of which the last vendor holds the latest. Tho facility with which men possessing little capital have thus been enabled to purchase areas of land much beyond their ability to improve and work, has be n a potent factor in putting up the price of land ngainst the buyer who really has adequate means to carry out his undertakings.

A NOTE OF WARNING. Now. making tho fullest allowance for the productivity of tho soil and our wonderful climate, I am still of opinion that sooner or later this country will suffer severely through the absurdly high rates at which, to satisfy the earth hunger that is existing country lands have been changing hands within recent times, [t liny bo argucd-in fact, is argued by snuifl peoplo-thnt 'buyers are justified in k viug such prices when they take into account tho returns they have received from the soil during tho past five years, and I admit that in some cases the results have seemed to warrant the prices Z 1. But, with the existing prospect of dearer money and tho. certainty of a <leclino in tte purchasing power of the countries that have been devastated by the war; it is neither wise nor prudent t" ba*e land"values upon tho assumption ■hat the late bonra prices for our prodiico aro going to continue indefinitely. \lI any cases have come under our notice where tho price recently paid b*[boon double and in some instances treble, Urn at which tho property had. changed hand in 10H. Pri-iea for dairying and have van up to £U per acre.and we lmve hnnrd reports that even .KOO per acre a»d more has been paid in son. *'" Where the greater part of such urchase'money remains on mortgage Ho what would bo the position of he mortgagor, thus heavily encumbered. °tte event'of a fall in the price of dairy produce of, say, 25 per .cent. Tt niav be that a mortgage does not occasion a farmer the same concern as it. docs a business man, for I know of some farms on which no fewer than five mortgages were current at the same time.

Needless to eay, that class of security does not commend itself to us. Indeed, with the object of checking speculation, this and other banks in New Zealand aro refusing advances to customers to enable them to buy land at these inflated prices unless applicants, by including other property in the security, can make the cover unquestionably ample. It i 3 significant that many shrewd and well-to-do people aro, to-ciuy taking tho utmost advantage of the present land boom to subdivide and realiso upon their holdings. » , MONEY MARKETS. The conditions of the money markets of the world point to tho probability of scarcity of money and consequently higher lending rates in the not distant luiure. 'lino dellution of tho currencies, which is held by most economists to bo tho essential preliminary to the re-es-tablishment of satisfactory financial conditions and the speedier revival of industry and trade, will inevitably bo accompanied by appreciation in the value of monoy. .Deduced supply will mean increased value of the quantity remaining available. A preliminary movement! of this nature has- already taken place consequent upon the restriction placed by leading banking institutions in various parts of the world upon facilities for speculation. An upward tendency in the value of money is apparent. Tho Bank of England rato is now 7 per cent., to which it was raised irom G par cent, on April 15 last. The British Government is paying GJ- per cent, on its Treasury Bills. Its Exchequer Bonds with a currency of two years aro. reported to be yielding over 7i per cent. 10 tin' investor, and flat loans with a currency of 25 years and moro are returning to the investor M Gs. Od. per cent. All borrowers, 'both Government, public, and private, must be prepared to pay higher rates for future accommodation. The fairly certain contingency of higher future rates should prompt a very careful scrutiny of the circumstances surrounding all contemplated undertakings, whatever their nature may be, involving the employment cf borrowed capital, in order that would-be borrowers may first satisfy themselves that tho project in hand is likely to prove sufficiently profitable to justify the heavy handicap which the cost of the necessary capital is likely to impose. In the caso of Government undertakings, it is important that the authorities should be on their guard to. resist any political pressure designed to force them to enibarfc in ventures which could very well be left to private enterprise.

ECONOMY NECESSARY. The Prime Minister, the Eight Hon. W. Jf. Massey, has, on more than oue occasion,' ; urged the necessity for economy, and the injunction cannot be too strongly emphasised at th© present time both as regards public and private expenditure of every description. Unfortunately, the public does not yet appear to have appreciated this necessity, because expenditure of every kind continues for the most part on as lavish a scale as ever. But in this respect New Zealand is not singular nor by any n\eans the worst offender. Tho whole civilised world has been indulging in a riot of extravagance, and the reckless outlay has-contributed to feed a (lamo which, if not quenched, may shortly develop into a conflagration which may threaten the very foundations of ordered civilisation. GOVERNMENT BORROWING. It will be noted that the Minister of .Finance has just issued the prospectus of a Government loan of two millions, with a currency of ten'yenrs. The issue price is to bo par, and the.rate of interest five per cent., subject to income tax. Tho Minister further intimates, that another loan, of considerably lavge-r nnlount than this, is practically certain to be offered locally before the end of this year. The Minister of Finance is, I believe, wise in not endeavouring to obtain his requirements in Britain or elsewhere outside the Dominion; such borrowing if practicable would at present bo unduly expensive. PRODUCE MARKETS AND TRADE. With the cessation of the Imperial Government's purchase of produce, the 'producers' of New Zealand must make the best arrangements they can for the financing and marketing of their produce. The banks will,, no doubt, on terms and conditions to be arranged, bo called upon to provide very large simis for this purpose. That the position is full of difficulty and danger must be obvious to all. The stores are full of produce which cannot possibly be moved before the flush of tho next season, shipping is still scarce, and likely to remain so, and the terminal markets are gluttod so far as meat and wool are concerned. It may be desirable, if hot imperative, to look 'for new markets for wool and meat, but in this connection we can but turn to America, which is the only country apart from Britain that I can offer a. market. The British GovI eminent is itself cndeavonring i to avail itself of the American market in an effort to quit its own accumulations of wool and meat. The prospects in tho United Slates appear no better- than they are in Great Britain. Wool offered in New York registered a sharp decline, and it is vet to be determined whether a reasonably good market can be secured there for mutton and lamb, although, for the latter, arrangements have been made for several 6hipmonts within the next few months, totalling, in all, about 5(10,0(10 carcasses. In respect to frozen meat 'the United States Bureau of Markets, Omaha, under date March 5, said:—

Following the announcement of Hip exportation of three hundred thousand lamb and mutton carcasses by the British Government to the Unit-

Ed States early in the.week all Eastern lamb and mutton markets were sharply lowered. Declines for the week ranged from 2 dollars at Boston to 4 dollars at New York and Philadelphia, with all grades similarly affected and conditions at the close o{ the week unsettled.

Since the importation of frozen meat has the effect of cheapening that article, there is some hope that the mar kets of the Eastern States may bo capable of absorption, but enre will have to be taken in dealing with markets on the Pacific Slope. A San Francisco firm, in a circular letter to corresDondents. says:—

We strongly advise against Now Zealand shippers sending any meats to this coast on consignment unless they want to got "stung," as it is jtn easy matter to trade on other people's money. If Coast dealers want lamb, muttor, or other meat they can put up a letter of credit, otherwise tho New Zealand dealers had better keep their meats in their freezers, as we have known meat products to havpjjraotically eaten themselves '"up' with storage and other charges when shipped to this Coast ou consignment.

The circumstances of the time demand that businoss men should rather takein sail than crowd on canvas; and._all would be well advised not to stretch their financial commitments too far. Diminished production, decreased thrift and curtailed credit furnish the essential elements of a financial crisis, and such a crisis ecems inevitable in the not distant Juturo unless wo abandon dream iug and settle down to work and th<> practice of thrift. "Increase production and avoid extravagance" should to the slogan for the people of New Zealand.

Mr. Beauchamp then moved that the report and balance-sheet, as submitted to the meeting, be adopted. The dividend, he intimated, will be payable at Wellington tn-dav, and at branches on. receipt of advice. .*'.

SECONDER OF THE MOTION. Mr. ,W. Watson said: According to our custom, now time honoured, it is mv turn to second the motion for the adoption of tho report and balance-sheet, which I have much pleasure in doing. The chairman' has left littlo to say roEnrdiiiu tlio business of the bank, bnl as one of your elected directors I may, without transgressing obligations of ««■ crecy, 'briefly state my own views as to the'Drospects and vnlua of your property. The general position of tho institution I regard ns, commercially r.neuking. unassailable. Intrinsic value of security rather than current value is our watchword, and full precautions have been taken against any decline in present market, values. You will have noted with pleasure the largo increase

of business since last year, and yon will also note that in the proposed distribution of profits .£150,000 is allocated to Keservo Fund and i!50',000 to writing down premises .and furniture, tho latter being already much below Government valuation. And looking back for many years you will note that the samo 'procedure has been adopted. Now as these constant additions to ltesarve Funds an dwritings-down of property practically mean accretions to the capital with which tho bank trades, the benefits of them must in lho long run accruo to the Government and yourselves, whatever shape such benefits may take. These increases lo tho bank's funds carry corresponding carnine power, and therefore it only requires a calculating rather than a sanguine mind to compute the value of the good will which is an important asset not taken into account in the balance ■. sheet. In the present day banks and in&uranco companies do not confine their operations to any one country, and looking ahead only a very few years to the prospects of tho Bank of New Zealand, they appear to me as very good. I take credit lo myself for having, before the establishment of the present hoard, singled out your present general manager, Mr, Buckleton, for 'rapid promotion. His subsequent career has proved his merits,, nnd your interests are in big hand'. I congratulate the staff in New Zealand, London, and elsewhere, on' what wo have bem able to do for them by w ai-o.f well deserved increase's to salnrinn. allowances, nnd pensions. Here I would sny te those who have the reM'onsihilitini of .advising youths as to tho choice of careers in life, that they should not miss inquiring what the tank Jins to offer in admitting officers to its staff. I intend to stand asnin for reelection to the board at the meeting te be held in Decerobor next, and trust tn rcrcive tin usual mark of vour confidence.— (Extended report published by arrangement.) .' ' Term of Directors. Dr. C. Prendergast Knight said that he wished to congratulate the oUairman on having carried out the arrangement made sonio seven yeare ago with the shareholders'- representatives for the increase of the capital of the bank. In those seven years there had been many changes. It would be Temembored that at that time the shareholders recommended that the tenure of office of Hie directors of the bank should ho increased, tile shareholders being of the opinion'l that the period of two y<:ars was too short. That. opinion had been only strengthened by what had taken place in the past seven years. Two gentlemen who had been directors of tho bank in that time had had their careers in. this position terminated at a time when t'aer had had sufficient experience of the affairs of the hank to make their- services as directors valuable to lho institution, lie regretted that these gentlemen were not at that time reappointed, but they had since been reappointed either by., the Government or by the shareholders.- He was of opinion, and this opinion was held senernlly by shareholders, that .the term of office should bo increased to seven years, or,at least to four years. ' ■ . • | Mr. Barnett said that he regretted that I there had been no mention made in the report of nny proposals to increase, the remuneration of the directors. These fees had stood without alteration from a time when the bank was in "a 7cr.v different ncsition from that held by it today. He ureed that other institutions not comparable in importance with tho Bank of New Zealand gave their directors much more liberal remuneration for their services. . Mr. John Mill supported the.suggestion that the fees of directors should be increased,, saying that the directors had served the hank remarkably- veil, and now deserved well at the hands of the proprietors. Tho imsiness had ' been brought from very poor estate to a very fine position, with a reserve fund or two millions nnd a half. M recalled the timo when he. already a holder of- shares, was offered by a friend of -his 300 shaves m tho bank, and offered also a premium of ss. a share if he would take them over. Ho had thousrht then that he had as large a holding as he could manage, and he had .refused the offer. " 'Dr'. Knight congratulated the ixwrd on bavins reviewed the. salaries of the shift in view of the increased cost or After the chairman had acknowledged the congratulations and other complimentarv references to himself and other members of tho board, the motion was nut and carried. Remuneration of Governors. Mr. Mill then submitted the following motion: "That in tho opinion of' the shareholders the time has now arrived in the history of this bank when the directors should receive the 6amo remuneration as the directors of our neighbour bank, the National Bank of New Zealand." He said that the shareholders recognised that it was due to. the prescience and ability and zeal of the Home and colonial directors that the bank occupied a prominent position among similar institutions, and they recognised also • that the services of the directors ought to be recognised by the payment of increased remuneration. Mr. D. Jones seconded tho motion. He pointed out that two of tho diwetora lived at Auckland, and they had to give up a great deal of their time in attending fortnightly meetings of the board. Ha had noted with satisfaction that the staff bad been treated well by the board, and he thought'that the time had como when, the directors themselves should receive better remuneration. Mr. F. Dyer said'that it was not generally known among the shareholders what remuneration ivas paid to the directors, and he isked that tnw information be given to' the meeting. The chairman said that the chairman received J3750 and tho directors .£450 each. Dr. Knight said that the payment was nhsurdly small. Ho was surprised that the Government should bo successful in obtaining for the board the services of suitable men from a distance, willing to sacrifice time and comfort in attending to the affairs of the bank for .so little payment. ' Mr. J. il. Upton (a director), said thai the dircc:ors did ' not act for the remuneration alone. Thcro were other consider:.: mis. There was some lilKe credit i:i ..'knging lo tho Bank of New Zealand.

Mr. lUHI put his motion to the meeting, ami it was- carried unanimously.' The chairman thanked Mr. Mill § and the other shareholders for their kindly remarks about tlio board. He did not know whether effect wculd be given (legislation being necessary) to the resolution of the shareholders or not, but in any case the affaire of tho bank would have exactly the same care as they had always received from the board. Dr. Knight moved a vote of thanks to the stalf, making special mention of the new general manager, Jk. Buck'.cUni. The motion was seconded by Mr. John \m. Then and Now. Mr. J. C. Hanna made some reference to the business of the bank. "I desire," ho enid, "to make ono or two brief observations on the balance-sheet and tho statement of accounts presented here today. If we. throw, our minds buck to tlio early nineties, with Iheir attendant financial Miiictics, and compare the position as it stocd then with tho position n.s it stands today, the most optimistio amongst us must be amazed at the rapid strides which the bank has made in the intervening period. Thirty years ago the total assets of the bank, including the Assets Company's liability of £\,&X,<M, stood in round figures at .£10,000,000,.0n which, after deducting fixed charges and ,£12,000 for rates and taxes, the net profits equalled u half per cent. If ve . turn to tho b.ifanee-sheet at present in our hands we find that woile the Assets Company's liability has completely disappeared, the assets aggregate .£53,000,000. This amount, after deducting the wliAe of tho. administrative expenses jind the huge sum of «£45i3,0n0 for rates nnd l(i>cs,the net profits equalled a shade under one per cent. But in con'iduring the earning power of the bank, it will bo well to keep in mind two points, firstly, that wo have cash and liquid securities to represent the high ratio nf IB per cent, cf the total assets. Obviously on the liquid resources of this or any other bank, the return in formal times—and the present times are anything but normal—is necessarily a modcrato one. The second point to

consider is that the rate of taxation under all heads has increased sinco 1891 by COO per i-enti In other words, had the liquid reserve ratio and the rates or taxation been maintained on the level with those current ia 1801. the bank to-dny would be showing nn increased earning power of lj per cent. I venture to Bay that if our friends had told ua in tho early 'nineties that this bank would in the futuro pay increased dividends to its shareholders, pay large sums to the officers' pension fund, freely write down land «nd buildings, and accumulate reserves of .£2,500,000, all in thirty years, we would certainly have laughed at them." In conclusion. Mr. Hanna said that in reviewing l ho affairs of this bank in recent years there, was abundant evidence at turn, backed by solid results to justify the expression of the thanks of shareholders to the directors and staff for their services during the past and many previous years. The motion was carried unanimously. A Good Career. Mr. Buckleton, general manager, expresed the thanks of himself and the staff for tho kind references to their work. Ever since the. commencement of the war the staff had had very strenuous times, and it was a great satisfaction to them all the the board had recognised this in making liberal increases to salaries, and in making a handsomo donation to tho pension fund. The staff were proud of their association with the bank, and proud' of their share itits advancement. Bat the staff wre looking forward to an improved position, and the deserving ones would not look in vain, for tho board was of.the qpinion that men of promise should be given opportunities of gaining experience which would fit them for rapid promotion. He endorsed the remark of Mr. Watson that the bank service oifored a career with good prospects to young men to-day. On behalf, of the pensioners of the- 'bank he thanked the board lor their liberality, and he spoke appreciatively also of tho services rendered to the hank during the war by the women clerks engaged to take the places of the officers who joined up with the Expeditionary Force. ' , Before the meeting dispersed the chairman .exhibited to shareholders a silver salver to be presented by returned soldier members of the staff of the hank, to Mr. Eobert Mill, manager of the bunk m London, as some slight recognition ol his assistance and kindness to them while, in London.

13,475,771 10,554,479 • «5| 1915 15958732 10,870,507 %&?M 1916 19091949 12,182,104 31,274,053 ■17::: »& ate,™ w»«o 1918 21614.302 13,891.195 '35,505,497 19 9 & 681 14,485,145 3884,826 1920 34,814,896. 15,850,195 60,665,091

A* March 31. 1914 17,422,663 At Marcn oi, »« . w.ao2,753 1916 23.147,158 1017 ; 26.901.830 H 1918 30,281,798 v 1919 34,'454,13&

a WM ■■ 2,017,107 21,649,643 Z3.«6.750 1915 ... 1654,4)8 22,106.144 23,740,662 1916 ... 1.437,655 23,683,892 1917 ... 1552 "3 i 26.142.067 27.694,550 1918 ... 1.223.465 28,094,431 29,317,896 1919 . 1.484,612 30,719,032 32,203.644. 1920 "... 1,280,188 30,761,854 32.042,042

over Calendar Exports. Imports, imports, year. £ £ £ 1910 ... 33.153,473 16,7-18.223 5,404 250 1911 ... 18,980,105 18.782.60B 197,577 1912 ... 21,611626 20.576,579 935,047 1913 ... 22,810,363 21,653.632 1,156,731 1914 ... 26,253,925 21144,227 5.109.69B 1915 ... 31.430,822 20.658,720 10,772.102 1916 .... 33.281.057 25,045,403 8,235,654 1917 ... 30,613,184 20,742,124 9,871,060 1918 ... 28,438,187 24,131.729 4306,458' 1919 ... 52,573,520 30,308,908 22,264,612 From the year 19H onwards tlio excess