" CAUTION."

Feilding Star, Volume IV, Issue IV, 3 December 1909, Page 3

" CAUTION."

-. — BUT PROSPECTS "DECIDEDLY GOOD." A BANKEB'S~WATCHWOttD. MR BEAUCHAMP AND THE BANK OF NEW ZEALAND. THE HALF-YEARLY MEETING. [BY TELEGBAPH.] Special to the Stab. . Wellington, December 3. The half-yearly meeting of shareholders of the Bank of New Zealand was held in the head office thifl mornmg THE CHAIRMAN'S SPEECH. Mr H. Beauohamp, Chairman of Directors, said: — . Uentlemen,-At our half-yearly meetings, no statement of accounts, as you are aware, is presented. Our principal business is the election or a Director? and for that position Mr Martin Kennedy— who has occupied a seat on the Board continuously as your representative since 1894— again offers Ins services. There being no other candidate, I have much pleasure in declaring Mr Kennedy duly elected. , When addressing you in June last, I mentioned that, consequent upon the conservative policy then being pursued by this and other Banks trading within the Dominion, you should be prepared for a diminution in our profits. Our accounts for the half-year ended September 30 show that these anticipations were realised. Still, the results for the period under review are gratifying, and I have no doubt that, at the close of the present financial year, we shall be able to transfer a substantial amount to our reserve fund, and recommend the payment of a dividend and bonus equal to that you received for the year ended March 31, 1909. In the meantime, for the half year ended September 30, the Board has declared an interim dividend of 5 per cent, to the holders of ordinary shares, and a similar amount in respect to the preference shares issued to the Crown. This dividend will be payable ab head ofißco on Monday next, 6th inst., and at branches on receipt of advice. If the proposals now before Parliament regarding the taxation of banks become Taw, this institution will be called upon fco contribute a much larger sum than it now does. Calculated upon the present volume of the bank's business, the increase will amount to not lees thn £15,000 per annum. It may interest you to Know that our taxation under all heads last year totalled £35,640. This, I may mention, included payments to municipalities and public bodies as well as to the general Government.^ With these preliminary remarks, 1 desire now to congratulate the shareholders of the bank, and the country generally, on the better and more promising monetary conditions that prevail to-day, and I do not think it would be improper on my part should I claim some credit for the banking institutions of New Zealand for the change that has taken place. A year ago, the b.anks were criticised inside and outside of Parliament for not lending freely, notwithstanding that the aggregate of the advances and discounts, as at September 30, 1908, exhibited a very substantial increase on the figures of the previous year.^ A good many people are under the impression that it is the duty of the banks to advance against all and every kind of security. The sooner this impression is removed the better, lhat the bankers of the Dominion pursued the right course during the past twelve or eighteen months is proved to some extent by the easier tendency that now prevails in the local money market. The banks are to-day in a much stronger position, and nuite capable of furnishing all the legitimate banking accommodation that may be required. The bank returns for the past quarter show the strength, and we have but to compare the aggregate of the Fixed and Free Deposrts and the Advances and Discounts with the figures for the corresponding quarter last year 'to appreciate the point. They are as follows: —

Last year the banks helped their customers' liberally, and to this is largely due the fact that the depression was mild and of short duration. A distinct revival in trade appears to have set in all over the world, but particularly in the United States — of late years the storm centre of the financial world. . Every mail received recently has brought intelligence of renewed activity in one industry or another. The steel trades are particularly busy, the demand for steel rails being especially strong. The railroad companies of America have large development works in hand and in prospect, involving an expenditure of many million dollars. The Union Pacific and Southern Pacific railway systems have extensions aggregating approximately 2000 miles in course of construction. The production of pig iron in the United States is now up to the highest level of recent years. The report of the German Steel Syndicates state that the orders on their books on September 10 amounted to about 550,000 tons more than at the corresponding period last year. In Great Britain there is a distinct improvement. Shipbuilding, the main industry of the United Kingdom, is showing signs of recovery. According to Lloyds' Register of Ship-build-ing returns, the tonnage under construction on September 30 was about 30,000, tons more than that which was in hand at the end of the June quarter, and about 45,000 tons more than was building twelve months ago. The European and American money markets are at the moment rather high (the Bank of England rate now standing at 5 per cent.), but this is not an unusual feature at this time of the year. The Mother Country is unfortunately disturbed by a pending political crisis, for a general election is a great drawback to trade. The favourable conditions now apparent in Europe and America are being reflected in New Zealand. The export and import returns prove conclusively that the community Has profited by the temporary depre*ion. Traders and producers have been forced to face the position;, and their efforts have resulted in the equilibn *a being restored. The exports show a substantial surplus over the imports, and, so far as we are concerned, that amounts to a favourable trade balance. This point may be emphasised by figures. The values of the exports and imports for the year ended 30th September, 1909, compared with the figures for the two previous years show as follows: — Exports. Imports.

(Note : These figures do not include specie.) It will be seen from the figures I have quoted that, while in 1907-8 the imports exceeded the exports by £1,380,281, for- the year just ended the exports exceeded the imports by £3,784,151. We are in effect back to the position we were in in 1906-7, which was the year of our extreme prosperity. It is not neoasary for this oountry to show a* substantial excess of exports over imports, because we have to meet annually a very large interest liability in connection with public and private indebtedness. We have, it would seem, practically recovered the ground lost m 1907-8, and we may now reasonably anticipate a farther forward movement. Tnerejiire many factors thai warrant this expectation, ami it > may be 'as well to make a brief reference to titan.

of the new season's wool clip sold j in Wellington and in other .parts or' the Dominion, as well as at the sales held in the chief centres of the Coinmonwealth, indicate' very clearly , that, at the moment, there is a strong demand for this staple, as was j anticipated by our London advices. ' Values realised at these sales were j considerably in advance of those current a year ago, and latest London cables show that the market presents features of great strength. "Whether this firmness will be carried into the New Year is problematical, for wool men are likely to be guided «y their well-known maxim: "When wool is dear it is dangerous : when it is very dear, it is very dangerous." Values \are extremely high just now, «uid only twice in the last nineteen years have they been quite as high. There may be a reaction, but in any case it is very probable that higher prices than last season will be obtained. New Zealand will produce a larger clip this year, and, with the higher range of values, quite two minions sterling should be added to the income of the producers. The exports of both butter and cheese show very substantial increases in quantity, and as values are prac ticany up to the level of last year, wo are justified in anticipating a fairly substantial increase in the income from this source. Roughly, tl) is increase should represent £250,000. Mutton and lamb have recovered from the depression that affected them in July and August, and although the market is showing signs of weakening from pressure of supplies, the Dominion should, with an increased output, be able to maintain its income from this branch of industry. There is some hope that developments in the chilled beef trade, with the aid of the Linley process, will take place in the near future. The success of the shipment by the Marathon from Queensland is very encouraging. Hemp has improved materially, the c.i.f. quotations for January-March shipments being well in advance of those ruling a year ago. Hemp is, in point of fact, at remunerative level, and most of the mills can be operated to gay. An expansion in the output of this produce is, I believe, one of the certainties of the season. Wheat and oats and other grain and pulse will again add materially to the volume .or our exports; and, taking all the factors into consideration, 1 am of opinion that when the produce year ends on »September 30, 1910, the amount of our exports will (fstabish a record in point of value. The prospects before us are decidedly good, and this Bank, with its ramifications and close connection with the producers, must necessarily benefit. I cannot, however, refrain from repeating a warning note; caution must continue to mark the policy of the trading community, and the land speculators throughout the Dominion must endeavour to moderate their views on values. New Zealand has greatly increased her obligations in recent years, and while she is well able to faithfully meet all engagements, there is no reason why the people shouul be handicapped in their work by ridiculously high land values. "Caution" should "bo the watchword of the people now and aiWa3f " A DISCUSSION. Mr Martin Kennedy took exception to the policy of not declaring the usual bonus of 1\ per . cent. Some people, he said, thought the State should have a larger slice in the Bank than it had got, and he considered it was high time shareholders entered a protest against any action of the kind indicated. If the State must take more, let it carry a case before the Arbitration Court ailu pay the full earning power of the shares. The Chairman the necessity of building up a reserve rapidly. He expressed the opinion thai higher bonuses should not be declared until the reserve fund reached one million. He was hopeful that, by pursuing that policy, they would not only be able to pay off the three millions wh'en that sum matured, but extend operations without increasing the capital, and thus hay© a larger earning power on a small capital in proportion to capital. The Bank's trade was larger tlTan that of any other bank in Australasia. He did not approve of going^ to Parliament for an increase of capital. The motion for the adoption of the directors' report was adopted.

Year. £ £ 1906-7 ... 19,891,846 16,071,887 1907-8 ... 16,370,687 17,750 868 1908-9 ... 18,700,156 14 916005

Fixed and Free Deposits. 1909. 1908. Bank. £ £ Now Zealand .. 10,199,028 9,496,580 Union 2,790,889 2,786,534 New S. Wales 3,009,416 3,057,706 Australasia .... 1,736,224 1,771,716 National 3,243,563 3,197,471 20,310,007 (Note : These figures do not include Government Deposits.) Advances and Discounts. £ £ New Zealand .. 7,091,41jl 8,480,888 Union 3,160,610 3,371,232 New S. Wales 2,505,193 3,211,533 Australasia .... 2,756,305 3,296,663 National i 4,657,188 2,857,543 ~I&XMW 21,217^959