BANK OF NEW ZEALAND

Greymouth Evening Star, 11 June 1937, Page 9

BANK OF NEW ZEALAND

ANNUAL MEETING. THE CHAIRMAN’S ADDRESS. WELLINGTON, June 11. The annual meeting of shareholders of the Bank of New Zealand, was held to-day, Mr A. T. Donnelly presiding. After referring to the results of the year’s operations, and the changes in the directorate, Mr Donnelly said that the profit for the year being considered satisfactory, the Board felt justified in granting to the staff a bonus of 7i per cent, on their salaries as at March 31, as a tangible mark of appreciation of their services.

Continuing, he said the deposit and advance figures of the six trading banks for the March quarter of 1937 show some material changes as compared with the corresponding period of a year ago. The total average deposits have increased by over £6'00,000, but a marked movement has taken place in the two classes of deposits, free deposits having increased by £5,291,080, while fixed deposits are lower by £4,603,926. Advances have increased by £1,834,874. The trading banks’ deposits with the Reserve Bank at March 29 last, amounted to £8,880,494, approximately £5,300,000 in excess of the statutory balance required to be maintained. The London funds of the Reserve Bank, and the funds of the trading banks held in London relative to their New Zealand business, together amounted at March 29 to £ (N.Z.) 30,147,018.

Exports for th*e year ended March 31, 1937, are higher by about £8,500,000 as compared with the preceding year, the chiei’ factors being the increased values of wool and dairy produce. Import figures are up by over £8,000,000. The excess of exports over imports is still more than sufficient to meet New Zealand’s oversea interest bill and other recurring external charges. Nevertheless, the large increase in the import figures prompts me to suggest that merchants should keep a watchful eye on the trade figures when considering their orders for importations. The Dominion is enjoying a period of relative prosperity. The high prices obtained for wool and increases in the production of, and return from, butter and cheese have largely added to farmers’ resources, and trade has benefited accordingly. In addition, the Government has embarked upon an extensive public works policy and has also by legislative enactment restored wages to their 1931 level, thus adding considerably to the people’s spending power, though these better conditions have been offset to some extent by increased cost of living. DAIRY PRODUCE.

The “Primary Products Marketing •Act, 1936,” is the form in which the Government gave expression to its policy of Guaranteed Prices, and introduced changes both in marketing and in finance.

To administer the Act, a new department of State —“The Primary Products Marketing Department” —was set up and took control of the export of dairy produce as from August 1, 1936, purchasing butter and cheese from manufacturing companies at a fixed f.o.b. price and arranging for its sale and distribution overseas. The guaranteed f.o.b. prices fixed for the past season for butter and > cheese were based on the weighted average of market realisations for the eight-to-ten-year period immediately prior to July 31, 1935, and were calculated to return to reasonably efficient butter and cheese manufacturing companies 13.04 d, and 14.54 cl pei- pound of butterfat respectively, after some allowance for a possible rise in costs had been made.

For the purposes of the Act a “Dairy Industry Account” was established' at the Reserve Bank of New Zealand which was given authority to grant accommodation by way of overdraft in aid of the account. All moneys derived from the sale of dairy produce are payable into the account, and all moneys required to purchase dairy produce and to defray the costs of administration are payable from the account. The condition of the Dairy Industry Account, therefore, will depend on the degree of conformity between the prices paid 1 to dairy manufacturing companies and the prices realised on the market. The low prices realised for dairy produce in the earlier part of the season foreshadowed a heavy deficit in the Dairy Industry Account, but the later recovery of the market now makes it clear that the deficit will be much smaller than was originally anticipated. The relative movement of cheese and butter prices indicates that the cheese account should fully clear itself, so that any loss on the account as a whole is likely to be due entirely-to the deficiency on butter. , • It is estimated that when the allowance is made for the relatively heavy quantities sold at low prices, the average realisations to date will be in the vicinity' of 97/6 for butter and 61/- for cheesb. The effect on the trading banks of the change-over in marketing methods is as follows: — Formerly ‘ drafts against shipments of produce were negotiated through the trading banks, mostly under letter of credit established by the London merchants. Under that system the trading banks made payments against produce in New Zealand and receive in London the proceeds of the produce. Payments to th- dairy factories against, shipments of butter and cheese, are now financed by the Reserve Bank of New Zealand, which also receives in London the pioceeds of the produce when it is sold. Ihe trading banks are thus deprived of tho London exchange arising from dairy produce, but lite Reserve Bank is prepared to sell to them any suiplus of the London fulids so obtained which may be available alter the Government's requirements have been fnct.

\ "Guaranteed Prices Investigation Committee." lias been set up by the Government, to make recommendations based upon the above considerations, but its report is not yet available. It is reasonable to suppose, however, that the Committee is fully aware ot the desirability of maintaining as close a connection as possible between prices paid to producers and prices realised on the market. Provided no permanently increasing gap appears between these two sets of prices, the Act should prove beneficial to producers in protecting them from severe fluctuations of the market. WOOL. Shortly after the .July Eerier- of London won] sales a strong inquiry devel-

oped from all sections of' the trade. Activity slackened' off shortly before the September series, but as the sales progressed competitioni and values improved. From then onward the demand for, all wools was strong, and at the November series prices appreciated from 15 per cent, to 30 per cent. In the circumstances the opening of the New- Zealand sales was looked forward to with a great deal of interest. The opening sale fully confirmed the improved demand, and wool realised prices which represented an advance of 5d to Sd per poulnd on those ruling the previous season. As the sales progressed the demand became even stronger and the market rose still further. In February the market eased to a definitely lower basis, and the outlook for a maintenance of prices was very doubtful. Reports from London, however, indicated that new business had developed with the result that at the March sales in London buyers operated with renewed confidence, and tho market remained very firm at the January level. From this point the market in NevZealand recovered lost ground, and, the sales conducted during the remainder of the season showed a very strong demand, with values still on the up-grade. A very satisfactory feature of the position is that all accumulations of past seasons’ wool have now been disposed of. It has been stated that users of wool are “nearer the sheep’s back” than they have been for a long period. If this is the case then, apart from political disturbances prices should remain on a remunerative basis for some time. The total number of bales sold in the Dominion wool sales during the 1936-37 season *was 663,798. The total value was £ (N.Z.) 14,903,257— an increase of £5,062,830 compared with last year. To the value of the wool sold locally there must be added a considerable sum to cover the realisation of wool shipped direct to the London sales. When we look back on past seasons, we find that in no previous year since the war years has the wool sold in New Zealand realised such a gross value as in the present one, the nearest. approach being that of 1924-25, when the wool sold realised £13,537,344. In that year, however, the quantity sold was only 462,795 bales at > an average value per bale of £29/5/-, and an average price per pound of 20 21d. When making comparisons with realisations of the past, it should be borne in mind that a proportion of the present out-turn is accounted for by- the high rate of exchange. If an adjustment is made in this respect, the present seiison is comparable with that of 1923-34, when the wool sold realised £11,623,924, with the exchange rate at a nominal figure, rhe average price per pound that year was 15.78 d.

MORTGAGE ADJUSTMENT After referring to the frozen meat market transactions, Mr. Donnelly commented on the Mortgagors and Lessees Rehabilitation Act, outlining its purpose. He said: —Mortgagors ami others desiring review of their liabilities were required to file their applications with relative statements before the end of January last. A very large number of applications was lodged, and Adjustment Commissions arc now engaged considering them. Some of the applications made arc probably without merit. Many others arc lodged on grounds which are relatively unimportant and which are capable of easy adjustment, and in some instances have since been ad justed by private arrangement. It is pleasing to be able to report that, having regard to the magnitude of the Bank’s operations, comparatively few of our customers have applied for adjustment of their obligations to the Bank. In many cases the applies tions of our customers have been for the adjustment of their liabilities to creditors other than the Bank, but as. under the Act. an application for the adjustment of any liability involves a review of the applicant s whole position, the Bank has necessarily been concerned in all such applications. A comprehensive Act of this nature, imposing novel conditions as between creditor and debtor, has unavoidablj introduced new problems ol administration. particularly where considerable time must elapse before applications are finally dealt with; but in all cases the Bank has endeavoured io promote the smooth working ol the legislation by devising methods which would (liable the various applicants io carry on their businesses, farming or otherwise, without embarrassment. So far few decisions have been given bv the Commissions and the Court in cases in which the bank is concerned. I am, however, pleased to be able

to'inform you that in a number of instances voluntary settlements have been arranged with customers on terms which have been regarded by the applicants concerned as quite satisfactory. I should like to clear up a misconception which may exist in (he minds of some of our customers and possibly others. It is not the policy of the Bank to call up advances arbitrarily at any lime. While batik advances arc repayable cm demand, tlm occasions on which forma! demands for repayment arc made upon customers are rare, and it is only where there are very strong reasons for taking such a step that this is done. It must be remembered that the success of the Bank depends ou the goodwill of its customers and that if ils borrowing customers are subjected to treatment which they have reason to consider is unnecessarily arbitrary, that goodwill may be speedily lost. A little reflection would show how unwise it would have been tor the Bank, even bad there been no relief legislation, restricting the powers ol mortgagees, to embark in depression years on a policy of insisting upon repayment of loans and, in default of payment, exercising the powers ami remedies of a mortgagee.

Mr. William Watson in seconding the motion for the adoption of the Report and( BaJa.nceisheet, said: —. Remarkable us the progress of New Zealand has been, it lias become a matter of concern of late that in recent years the Increase in the popula-

lion has not kept abreast of that in other parts of the .British Commonwealth. Many have already made public their views as to the abso Into necessity of steps being taken to secure a greater population for the sal’eljy, development, and trade of the coiiiHry. Railways, roads and harbours, have been prepared al heavy cost. and. by want of sufficient use. several of them are now burdensome to the districts and to (lie nation. My reason for adding this subject in seconding the motion, is that I believe it to be as important to the Bank and its shareholders as to all .sections of the people.