NATIONAL BANK

Evening Post, Volume CIV, Issue 48, 25 August 1922, Page 10

NATIONAL BANK

FIFTIETH ANNUAL

MEETING

HON. W. P. REEVES'S REVIEW

(FROM OUR OWN CORRHPOHBINT.)

LONDON,, 13tW July,

At the annual meeting of the National Bank of New Zealand, which marked the jubilee of the institution, the Hon. W. Pember Reeves (chairman of directors) spoke at length on the economic conditions in the Dominion. He traced the history of the bank since 1872, and paid a special tribute to Mr. D. W. Duthie, who is about to retire from the position of general manager.

Dealing first with the financial position of the Bank, Mr. Beeves pointed out that the paid-up capital remained the same at £1,000,000, and the reserve fund, with the appropriation of £10,000 now proposed, would stand at £1,050,----000, as against £1,040,000 at 31st March, 1921. When the new issue of capital was completed ,in September next, the paid-up capital would be £1,----250,000, and . the reserve fund would stand at the, same figure. Deposits showed a Blight' decrease of £53,000, while the note circulation showed an increase of £1,050,000. The total liability .of the frank under the heading of deposits and note circulation showed an increase of £997,000. Bills payable and other liabilities showed a considerable change. * Last year the figures were abnormal, owing to the rush of exports to the Dominion, and the reduction of £2,500,000 in bills payable .and other liabilities was only an indication of the f?storation of the exchange position. The fullest provision had been made for all bad and doubtful debts. This year there was nothing to provide for. the securities depreciation account; indeed, on 31st March last, it showed a ■ substantial surplus, which at present values was still more substantial. COMPANY'S ASSETS. ■ On the assets side, ■ coin and .bullion and cash at bankers' and money at call were £1,520,000, and showed an increase over last year's figures of £215,----000. Investments ' had decreased by £787,000. Figures of bills receivable had increased £666,000, while advances had come down from £10,560,000 to £8,880,000. Landed property and premises had' increased £46,000, and now stood at £242,000 as compared with £196,000 last year. They: had moved last ' February into their new London office, and had found it in every way satisfactory. They hoped that the new premises in Auckland would be completed and ready for possession at the end of this year.' A branch had been opened at Couftenay place, Wellington, a part of the city which was rapidly inceasing in importance' as a business centre. ■ ' ; PROFIT AND LOSS. Gross profits amounted to £596,000, a reduction of £49,000 on last year's figures, while the net profit was £213,000 against £327,000 at 31st March of the previous year. The reduction of £114,000 in net profit reflected the difficult general position of the past twelve months. Considering all the circumstances and including the heavy taxation they had to pay, they thought the result of the year's trading was quite satisfactory. It was clear to the directors that the phenomenal business of 1920 would not continue, but must be followed by, a reaction. They therefore conserved the extra profits to strengthen their position. A bonus had been paid to the, staff, absorbing £15,000. It was proposed to carry forward £142,000, as compared with £116)000 for 1921. They were not the only colonial bank which thought' it wise to have a large carry-forward in uncertain times like.the present. . ' RESPECT FOR WORK. Dealing with the' prices of New Zealand commodities during 1921 and 1922, Mr. Reeves said :—'' That depressed values: for over 90 per cent, of the Dominion's exports should be severely felt cannot i occasion any surprise. Difficult situations arose. But there was little despondency. The position was faced with courage. Early in the New Year came a better feeling, engendered by rising prices, and while a certain number of unlucky speculators who, led away by war-time product prices paid unwarranted prices for land, have had to relinquish their holdings, the general feeling today is distinctly brighter. Much remains to be done, but the rigour of hard experience is restoring something of the. old-time respect for work, and expectations in advance .of reason are/ being succeeded by a recognition of the stern necessity for earning a living. There has been during the year an almost complete absence of serious labour conflicts in New Zealand—a blessing which we can only hope will continue. For myself I have faith in the working-classes of New Zealand. A great majority of them possess a fund of healthy common senso, and I refuse to believe that they will let their country down by holding up industry in a year of trial like this. INTEREST AND LENDING. After' quoting the banking returns of New Zealand for the, year, Mr. Beeves continued: "There are those who think that banks do not lend enough, ' and those who think that they chargo too much for accommodation. The figures I have quoted of advances and their ratio to deposits during the last : two years furnish a crushing answer to the first suggestion. They snow that if the New Zealand banks have erred at all, it has not been in lending too little. As a matter of fact they have strained their resources to the utmost to help their customers, and have borne even more than a full .share in the efforts necessary to avert a commercial crisis last year. ■To the second complaint, a pretty conclusive answer is provided by the weight of taxation levied on New Zealand banking. So long as an institution 'like ours has to pay in rates and taxes a sum equal to a charge of 1J per cent, on its advances, the public cannot expect cheap money. By what they pay, the banks make a large contribution to the Treasury and to the finances of: local bodies; the public cannot expect to have it both ways." Touching on the history of the bank during the past fifty years, the chairman recalled the fact that in 1896 the modest sum of £20,000 was set aside as reserve fund. A few months hence, . when the payments for' the recent issue of shares had been completed, the reserve fund would stand at 1£ millions, or a sum1' equal to the paid-up capital. While it was true that £737,000 of this represented premiums on new issues of shares, the very substantial sum of £513,000 was made up of transfers from annual profits. Especial credit belonged to the board, which between 1896 and 1910 set to work resolutely to build up a solid reserve fund.' Credit also belonged to the shareholders, who were willing to endorse that prudent policy when they did not get as high a distribution as they now; received. BORROWING AND TAXATION. Mr. Reeves also apoke at some length concerning taxation and borrowing in the Dominion. Whereas, the larger trader had had since 1914 his taxation increased from Is. 3d to 8s 9d in the £—a sevenfold increase—the taxation of the National Bank had increased about twentyfive times.. A, bank.'* ieconie. tax in New.

Zealand, Mr. Reeves explained, bore no realtion to its profits, but was assessed entirely upon average assets. and liabilities.

' eWe are aware," he said, "that taxation in New Zealand must be heavy, and we are prepared to pay our fair share of it. All we ask is that it should be levied on a just and scientific basis, and that the public should recognise that we are carrying at least our share of a burden which is beginning to press Heavily on the entire New Zealand community. It cannot be gainsaid that taxation in New Zealand is now really burdensome. Last year it reached a figure which meant an impost of between £18 and £19 a head of the population. This is a weight which no industrial community can support with any ease, except in times of phenomenally high prices. Prices have shrunk in New Zealand, and one has only to read the newspapers there to see that the fiscal burden is being complained of as scarcely tolerable. In one respect, moreover, the load is aggravated by the rough and discouraging system under which income tax is levied on the large companies. It is satisfactory that the New Zealand Government has appointed a Commission, whose members represent various important interests, to examine the system by which the income tax is levied and to report thereon. We have laid our case before the Government more than once, and shall continue to do so." PUBLIC CONFIDENCE. With regard to public finance, Mr. Reeves uttered something in the nature of a warning. ; Some month* ago, he said, the Dominion succeeded in floating a 5 per cent, loan in London on extremely favourable terms, and New Zealand 5 per cents, had at moment* stood higher in the London market than ■similar securities of the Imperial Government. The incident was naturally made a subject of comment in the English Press. This comment, justly complimentary to New Zealand as field for investment, must have been satisfactory to old colonists who could remember the persistent newspaper attacks made in London upon New Zealand in the 'nine-ties^-attacks generally based upon a misunderstanding of certain features of our legislation. However that may be, the British investor nowadays had confidence in New Zealand. "It is to be trusted that those who control her public finarfecs in the near future will do all in their power to conserve this confidence," Mr. Reeves continued. "It might be imperilled if public borrowing were continued beyond the point where prudence calls foT a halt. It was all very well to float loans every year or two in former days when the New Zealand Public Debt was not so swollen to its present.dimensions, and when taxation was low enough to be borne light-heartedly. But the permanent charges for interest on the public debts and for pensions in New Zealand have now risen to between £12 and £13 per head of the population. With this formidable figure in front of them, thoughtful New Zealanders are probably recognising that the time has come for hesitation in making continued large additions to the Public Debt. A THEATRICAL SIMILE. /. "It is true that war has ceased, but in place of the class of arms we see puzzled and puzzlinij financial, conferences at which bankrupt or embarrassed nations strive to hammer out methods for stabilising kinematic currencies, and for obtaining credit while dodging creditors. To borrow a simile from the theatrical world, one may say that on the European stage the drama of The Tempest has been succeeded by The Beggar's Opera. A young country like New Zealand can no more control worldwide financial "causes of disturbance than a ship at sea can resnlate a storm. But the ship's captain can take ir> sail; the , watch on deck can keep a bright look-out; and her steersmen can have a firm grasp of the helm when running before the gale." *■ References were made by the chairman to Sir James Coates, Mr..' Duthie, and Mr. Jolly, and these appear/Under a separate heading. . . ' v The Chairman concluded by moving the adoption of the report and accounts; the payment of a dividend at the rate of: 12 per cent, per annum for the. six months ended 31st March last, together with a bonus of 2 per cent, for the year, both free of income tax; the sum of £10,000 to bo placed to reserve; £6500 to the officers' pension and gratuity funds; and the' carrying forward of £142,120. ! Mr. H. F. Freshwater seconded the motion, which was carried. .

Sir /A. E. Harris, K.8.E., and the Hon. W. Pember Reeves (the. retiring directors) were re-elected to the board.