BANK OF N.Z.

Evening Post, Volume LXXXVIII, Issue 141, 11 December 1914, Page 2

BANK OF N.Z.

HALF-YEARLY MEETING CHAIRMAN ON THE BANK'S POLICY THE OUTLOOK— "A PROSPEROUS t SEASON " The half-yearly general meeting of shareholders of the Bank of New Zealand was held to-day. Mr. Harold Beauchamp presided The Chairman, after reference to the reappointinent without opposition of Mr. William Watson, shareholders' director, dealt with the new capital, and stated that of the total issue of 75,000 new ordinary shares of £6 13s 4d each, there remained now only 559 shares unapplied for. Of these, 301 were the result of odd holdings, of which there were no fewer than 602. In respect of each of these, there was an odd share that could receive no allotment, as the principle of the new issue was one new share for every two old shares held. ,Of the shares actually offered to proprietors, only 258 therefore remain unsubscribed. The board had decided to offer the whole 559 shares to the shareholders at present on the register, for sale by tender. Circulars on the subject had been sent Out simultaneously in the colonies and in London. The majority of shareholders elected to pay all -instalments in full. The amount then paid was £410;592; the amount now paid-up is ±5457,926, showing an increase to date of £47,334, with,_ of course, an increase of relativo premium passed to credit of reserve fund, to the extent of 50 per cent., i.e., £23,667. THE RECENT FINANCIAL CRISIS. After reference to the financial crisis brought about by the war the Chairman remarked that "we may be said to have come through the crucial stages with the minimum of inconvenience and lass. The foresight of the London board had anticipated the financial difficulties that would arise upon the declaration of war, and .consequently, when the crisis was precipitated, we were in the comfortable position of holding a very large balance of cash at the Bank of England. Moreoverj conformably with our policy, the London portion of our business in invariably conducted with a view to ready convertibility, and our advances there aro made - upon - such high class security that, immediately upon the Bank of England opening its doors to the discount of bills, the greater part of our. resources there /became liquid. " We therefore had not, at any time, the slightest trouble in meeting all our commitments and providing for all requirements. As a matter of fact, we did not avail of the British moratorium, but met all our liabilities as they matured; and as far as we ca,n see ai? piesent, the" losses that 'we are likely to sustain on our purely London business are practically nil. There has been, of course, a temporary deprivation in the value of all investment stocks held, and while our present intention is to make full provision for tho shrinkage in value as soon sis the resumption of market quotations, enables us to assess the amount of it, we in no sense regard it as a loss, for we feel confident that when the existing troubles have passed away the British Empire will emerge greatly strengthened in credit and reputation, and in other ways materially benefited, so that the market' prices of all her securities may then be expected to take a steady upward course. "WEATHERING THE STORM." "That fcho bank should be able to weather so Severe a storm with practically no damage is, I am sure yon will agree, conclusive testimony to the soundness of the business we transact ; and the wisdom of our • policy in this respect'has in the recent .upheaval been made more abundantly evident than ever before. It affords me much satisfaction to be able to emphasise the fact in so complete a, manner, because it has become tho fashion in some uninformed quaiters to denounce that policy in somewhat strong terms, and to suggest that the large amounts we sometimes show jib being held hy the bank in London are in speculative investments attended with, very considerable risks. Had such been the case, you may depend upon it out position at the present time wouid have been very different from what it actually is, and the effects of the trouble would have been felt in this Dominion much, more keenly than they have been. As matters stand, however, the command of financial facilities at such a time ha& enabled us to carry on our business with, the smallest measure of disorganisation, and the minimum of inconvenienc/J to our customers. Naturally, we have had j to observe a restrictive policy in iiio matter of advances, otheiwise commitments might have been incuirsd whi'h j would have absorbed our liquid resources to an extent that would in the circumstances, have been prudent', bat .«o have done our best, within safe -lines, to meet all reasonable demand*. In point of fact,- we believe that we have succeeded in meeting all legitimate requirements ; and'- 1 have little doubt that our customers 'generally recognise tins j and are satisfied. i "The same remark appL'<;s in the case of the other banks in the Dominion, each I and all of whom have apparently done what they could to ease tbe severity of the pressure. A comparison of the average quarterly returns at 30th September with those at 30th June last shows that the aggregate deposits of the public had been reduced, during tho quarter, £504,000, and the aggregate advances increased .by £523,000, representing , over £1,000,000 in all — our own share in which amounts to about £690,000. THE LONDON BOARD. Mr. Beauchamp believed shareholders felt with him that a more than usually cordial recognition of the services rendered by the London board to the bank was called for op that occasion. It was not the custom to make such recognition at the half-yearly general meeting, but the circumstances this year were exceptional. In conserving the bank's financial position and pi-otecting shareholders' interests, the local directors in London' passed through a 'most strenuous time ; and the easy position in which the bank stood to-day was largely the result ■ of theif foresight and prudence in the conduct of the bank's affairs in London. It afforded him much pleasure to record appreciation of the exceptionally valuable character of their work during the half-year. He was also very pleased to an- | nouuee that since last meeting the London board had been strengthened by ihe appointment of Sir James Mills, K.C.M.G., as a local director. Sir James's name and personality were familiar to most people throughout New Zealand, and as managing director (until recently), and still chairman, of the Union Steam Ship Company, he had been closely identified with the industrial and social development of the Dominion for very many years, They would agree with him that they were fortunate in having secured a gentleman so well qualified to fill the post of a local director in London. HOW NEW ZEALAND HAS FARED. Within the Dominion the ill-effects of the fitate of war were not very apparent. The withdrawal of the, Expeditionary

Force of 10,000 men had, of course, affected the labour market to some extent, and many businesses were working shorthanded in order to keep places open for the men on their return. "The industries of the Dominion (the Chairman continued) are not likely to be adversely affected by the war, but rather the reverse. Prices for our staple products—wool, meat, butter, and cheeseare satisfactory, and a large output is assured. If adequate facilities be provided for the conveyance of our product* to the remunerative markets that are awaiting them, a prosperous season will be experienced. Shortage of carriers was at one time apprehended, but the Government has now taken the matter in hand, and is understood to be making arrangements which will give ample provision for export of all produce available. Until January, at any rate, adequate shipping facilities appear to bfc' provided, and we are glad to have the assurance of the Right Honourable the Prime Minister, after communicating with the High Commissioner for New Zealand, that there is little doubt there will be no serious difficulty in providing thereafter insulated steamers for the transport of all our produce for the remainder of the season. Given the maintenance of full shipping facilities and a continuance of good prices for our products, which se6ms likely, our exports for the current year may be expected to show a value at least equal to those of last season, which, it will be remembered, approximated £25,000,000. A YEAR HENCE. The Customs revenue of the Dominion has, so far, been remarkably well maintained. This maintenance of revenue is somewhat contrary to expectation, as we naturally looked lor considerable diminution in the volume of imports as a consequence of existing economic conditions. The dislocation of manufacturing industries in the United Kingdom and in other countries directly affected by the war, will inevitably lead to a largely reduced Output of manufactures, and the lessened expenditure of our peoples — both voluntary and compulsory — following upon the state of war which exists and the consequent financial stringency, will result in a substantial diminution of the demand for supplies by way of imports. The probability is that sufficient time has not elapsed to enable these influences to make their effects apparent, and that some shrinkage in imports and incidental revenue will be experienced later on. If these forecasts be realised, there will be, say a year hence, a much wider margin shown between imports and exports than has been customary in recent years. The Dominion's trade balance on the credit side of the account will thus be made a much more substantial one, and we shall be in a position to more easily provide for the special outlay connected with th 6 national war commitments, and for private benefactions, which have been on a commendably liberal scale. HUSBANDING RESOURCES. "The circumstances all point to the desirableness of discretion in the matter of expenditure, both public and private ; and, whilst the hoarding of money is to b& most strongly deprecated, the husbanding of lesouvces is both highly expedient and commendable. In view of the condition of the money market, it is satisfactory to learn that the N6w Zealand Government has completed arrangements for providing the lunds required to meet maturing loans and to carry on the necessary services of the Dominion. The British Goverment has, we understand, intimated its readiness to assist the nation's oversea dominions by advancing to them a portion at any rate of the moneys which" they may require during tho currency of the war. In this respec'fc the British Government has again shown a masterly grusp of the situation, and^ has thus merited the unstinted confidence n.n"d support of the Empire beyond the seas in this the gieatest crisis of the Empire's history. Our own Government is also to be congratulated upon ihe prompt and unhesitating manner in which it pledged itself to the support of the Mother Country, and placed its resources in men and money at her disposal. These are times in which high statesmanship finds a congenial field, and in the years to come our sons and daughters will, I doubt not, reap tho rich harvest of the good Imperial seed which is now, being sown. THE MONEY MARKET. "Meanwhile, the value of money locally is abov*e normal, and likely to continue so for some time. At Home, the demand for cash and credit for the financing of the war is enormous. Long after actual hostilities have terminated, the huge liabilities which have accumulated will exercise a stiffening effect upon rates, and we therefore ■ see little present prospect, even Under the most favourable circumstances, of any early easing in the financial position. Loan flotations on account of this Dominion, either locally or on the London market, are for the present quite out of the question. Local bodies having . schemes of loan expenditure in prospect should note this, and postpone for the present any active steps in the direction' of the letting of contracts which would involve heavy financial obligations." BANK OFFICERS ON ACTIVE SERVICE. Concluding, the Chairman said large numbers of the bank's officers volunteered for oversea military service as soon as it became known that an Expeditionary Force was being organised. Eightythree men were accepted for service equal to about 8 par cent, of the whole staff. As a consequence, holiday leave to the staff remaining on duty had to be suspended in order to ensure that the bank will have a sufficiency of men- for the transaction of its business. The terms of leave granted to the volunteering officers were six months on halfpay with reinstatement in the service on return if physically fit for duty. Shareholders, he felt sure, would concur in the board's decision, to deal thus liberally with men who had voluntarily placed their services at the disposal of the Empire in its hour of need. At last meeting the directors intended to have ready for that meeting the proposals for amendment in the Deed of Settlement, to bring 'it into conformity with tho existing statutory position. The outbreak of war, with its accompanying interruption of mail services and facilities for communication, convinced them that the time at their disposal was inadequate to enable all formalities to be satisfactorily observed and the shareholders afforded a reasonable time to consider the alterations to be adopted They therefore decided to delay submission of the proposals, and they were accordingly not being put before them at that meeting. The work was, however, well forward, and when the next ordinary general meeting arrives should be placed before shareholders. Profits during the half-year were quite up to normal standard. The directors, therefore, purposed paying 6 per cent, as usuaj, and a dividend at that rate — which, by the way, was equal to 12 per cent, per annum — was declared accordingly. New capital would participate proportionately, according to the amount paid up during the half-year and the date as from which the amounts paid were entitled to rank as capital. PAYMENT OF DIVIDENDS. Mr. William Watson thanked the shareholders for re-electing him as their representative on the board of directors. Ho further congratulated them upon the bank's position. The chairman had referred to the great folly of hoarding money away from tise. He would add .that, if tho ckcumßtancgs of companies

permitted the payment of dividends, it -would be unwise to r withhold them, thus limiting the income" of the shareholders and placing them in an awkward situation. Dr. Prendergast Knight congratulated the London and New Zealand boards on the way in which they had met the financial situation. On behalf of the shareholders, he wished also to express regret at the death of the Hon. T. Fergus. He had heard that Mr. Fergus's death was in part due to a chill caught when travelling to a board meeting. One of the disadvantages of a geographical board was that the frequent meetings put a tax upon men who would otherwise travel very little. Dr. Knight further congratulated the chairman upon the strong position of the bank, of which they had evidence in the fact that all but 250 shares of the recent issue were taken up by shareholders. Mr. G. M. Kebbell, in a humorous speech, criticised the architecture of some of the branch buildings of the bank. He suggested that the board should give serious consideration to the question of adopting some uniform style of architecture for future buildings. The Chairman replied that throughout the Dominion the batik was now endeavouring to put up a better' class of building instead of having offices of varied styles. The two latest branch buildings erected—at Palmerston North and Shannon — were *n every way creditable. This closed 1 the proceedings of the meeting.