BANK OF NEW ZEALAND

Hawera & Normanby Star, Volume LXVIII, Issue LXVIII, 11 December 1914, Page 2

BANK OF NEW ZEALAND

HALF-YEARLY MEETING. E,eporfc of proceedings at the halfyeaii/ c<e_e,-.„r iVie^ing, held on x'l-i-uay, lith i/ece-iiiD-M', ±jL4, ar, tlie xleaa Uaice or vie jjaiiii, j_ambton <^uuy, \, emugcoh, Mr. jtt_roid ±>eauCiiaiup, ciuiii'iu.iii or directors, presiaiiig. 'liie Uhairman saiu: 'ihis be.ng tiie naif-yearly general meeting, we nave no accounts, to «,utKiut to you, and tlie only accual business to oe transacted is tiie election of a representative or snarenoiuers on tne liuavd, and tlie declaration or an mterim dividend. board 01 _>vectors. —It is with deep regret tnat we have to record the death or. our late coiieague, trie _xonuur„uie inomas Fergus, wnich took place on bUxii beptemoer. Mr. _ ergtis was, as you know, only a comparatively recent audition to our nu.nber by appointment of the fcsovemnent; but since his accession to the board he had displayed such a lively interest in the business, and had assisted in our deliberations unn so.-much ab.lity and business acumen that we had lormed high hopes of his future services, liindowed with wide experience and matured judgment, | his removal from our councils, when I little past the prime of Lfe, is greatly to be deplored. The Board has fittingly recorded upon its minutes a resolution of appreciation of the late gentleman's services to the Bank, and or sympathy with ins relatives in their bereavement. As to your own representative on the Board: Ihe retiring director on this occasion is Mr. 'William Yvat&on. ne is the only candidate for the seat that is becoming vacant, and, as he is eligible for reappointment, T have mucn pleasure m declaring . him duly elected. >iew Capital.—Of the total issue of 75,000 new ordinary shares of £6 13s 4d each, there rcr.iaui only 559 shares unapplied for. Of these, 301 are the result of odd holdings, of which there are no fewer than 002. 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 heid. Of the shaves actually offered to proprietors, oniy 256 therefore remain unsubscribed. The Board have decided to offer the whoie 559 shares to the shareholders at present on the register, for sale by tender. Circulars on the subject have been sent out simultaneously in the Colonies and in London, so that our proposals are known to you. 1 As mentioned at our last meeting, the majority of shareholders elected rto pay all instalments in full. The amount then paid up was £410,592; the amount now paid up is £457,926, showing an increase to date of £47,334, with, of course, an increase of relative premium passed to credit of Reserve Fund, to the extent of 50 per cent., i.e. £23,667. The Financial Crisis. —In view of the disaster which has overtaken the financial world, since last we met you —a disaster which was inevitable upon the involvement of the leading nations ci the world in the deplorable.war which ib still in progress—you will naturally lock to me for some indication as tc the immediate consequences entailed, and the probable future effects upon the Dominion and upon the Bank in j particular. Immediately upon its becoming knowr that our Mother Country was involved in the struggle, the New Zealand Government, with commendable promptitude, took the special steps which became necessary to protect the financial situation in the Dominion. A bil enabling bank-notes to be proclaimec legal tender was passed through Parliament, and a proclamation issuec making bank-notes legal tender on and • after 6th August last. The proclamation has been renewed, and it will nc doubt be found desirable to' keep it ir. force until the war is over. The objeci is not so much to provide currency facilities as to enable the banks tc protect the gold reserves of the Dominion. The Government furthei assisted in this direction by legislation prohibiting all export of gold, excepi such as is specially sanctioned by the Minister of Finance. The legal tender note proclamation has resulted in an increase in our note circulation by roughly half a milloir. pounds. The' increase is, however", nc gain to the Bank, but rather the reverse. We have to hold gold oi Government securities against every note issued, while at the same time we pay taxation to the Government on the circulation at the rate of 3 pei cent, per annim. To this has to be added the cost of printing the notes and of administering the note department of the Bank, which makes the total cost of our note issue 4a —4-J- per cent, per annum. It was not found necessary to proclaim a moratorium here such as was required in the United Kingdom. AU that was needed was a provision for the protection of mortgagors, and ol purchasers under "Agreements for sale and purchase" with instalments ol purcase money falling due. This provision was made by the "Mortgages Extension Act," which prevents realisation by mortgagees or vendors under powers of sale contained in securities, except with the sanction of the Supreme Court. In London, the position was of course different. It was, as a matter of fact, very serious—far more serious than we at this distance, and in our circumstances, can possibly conceive. All the delicate financial machinery daily in operation there was thrown suddenly out of gear: the complex monetary organism whose vitality centralises in London was for the.jinoment paralysed. For a few days all was confusion. With the Bank rate at 10 per cent, the money market was dead,- the Banks were temporarily closed —the statutory Bank Holiday on the 3rd August having been extended over the 4th, sth and 6th ideii ; trade, shipping and commerce, all at a standstill; the British Government, bankers and financiers conferring as to the best means of meeting a crisis quite unprecedented in the history of the world. A moratorium was proclaimed, and, to assist in conserving the gold reserves of the country, Government Treasury notes for £1 and 10s each were authorised to be made legal tender. Postal notes were also made legal tender. The Banks were supplied with notes by the British Treasury, paying to the Treasury for the accommodation a tax equal to the Bank of England rate during the time that the notes are used. The Baftks re-opened on 7th August, but were unable to immediately resume discounting or the buying of bills of exchange. Then a measure of relief came. It was announced on 13th August that the Bank of England would give assistance under the guarantee of the British Government, by discounting approved bills of exchange accepted prior to 4th August, 1914 (i.e., approved premoratorium bills), without recourse to

the holder. Thereupon a rusb to the iiank' of England with bills for discount set in, prompted by a desire not only to obtain the linancial accommodation required, but also to get rid of ali liaointy on tlie part of tne holders of the bids. For a time it was a physical impossib.lity for the Bank to. veal with tne whole or the bills presented daily. But gradually the mass ot: business was disponed of. The streams of finance begun to flow again in their accustomed channels, though in greatly reduced volume. Business began to assume again a more normal aspect, and national cred.t was, in a k-rge measure, restored. _ 'vie Bank of England return as at ofch August disclosed the extent to which its resources had bee.-r encroached upon in the early days of the crisis: l'he reserve, which at 22nd July stood at £20,20 i ,\jsl, snowing a proportion to liabilities or 52 per cent., had shrunk at otn August to the dangerously low figure of ±^,966,649, showing a proport.on to liabilities of only 15 per cent. At the commencement of August -the suspension of the Bank Act had been openly talked of as a probable contingency; but the measures adopted to strengtnen the position promised to prove effective, and resort to that extremity was unnecessary. The Bank rate, wnich "had been raised from 3 per cent, to 4 per cent, on 50th July, and further increased to 8 per cent, on 31st July and to 10 per cent on Ist August, was, on the resumption of business after the enforced holiday, reduced to 6 per cent , and on Bth August to 5 per cent., at which rate it stiil stands. The cordial support accorded to the Bank of England has been one of the most noticeable features of the crisis from a banker's standpoint. The Bank return published on 26th iNovember shows that the Bank's deposits at 25th ictem amounted to £175*154,000; and its reserve to £55,356,000, showing a proportion to liabilities of 31.60 °p'cr cent. The Chancellor of the Exchequer, speaking m the British House of Commons of the importance to. the nation of preserving a strong financial position by conservation er the gold reserves of the country, made use of these memorable words: i "i think it is vital that it should be made clear to any individual and to the nation at large that any man who at the present juncture selfishly hoards gout is inrncting a great injury on the nation. In this tremendous struggle, finance is going to play a great ' part. It will be one or the most formidable weapons in this exhausting war, and anyone who, for selfish motives of greed or through excessive caution and cowardice, goes out of his way to attempt to withdraw sums of gold aud to appropriate them to hit, own use —let it be clearly understood that he is'-^fssisting the enemies of h:s native land and he is assisting them more effectively probably than if he were to take up arms." The warning has, I ."think, not been lost upon the British nation. Specie p&yihents were .never, at any period of the crisis, suspended, and there is no reason to apprehend tbat hoarding of gold, to any appreciable extent, has taken place. Tne British public has freely placed resources at the disposa: of the Bank of England, and the national financial position has thereo'j been greatly _ strengthened. ' Owing to the disascious drop in tne .prices of ali securities, it was founc necessary to close the London Stocli Exchange. The American and Colonia. Exchanges and the Continental Bourses also closed. Some have since reopened. but the London Stock Exchange still remains closed. Consequently, dealings in stocks and shares were, anc are, practically at a standstill. The British Government however, having, through the Bank of England relieved the situation by the discount of mercantile bills, has now, turned its attention also to the assistance oj ienders upon Stock Exchange securities; and, with a view to avoiding the necessity for realisation of securities on a large scale, has agreed to makt advances to certain classes of lender; to enable them to continue their loans on such securities until the end of tin war. In consideration of lender; agreeing not to press ror payment oi loans on Btock Exchange securities, cj to require deposit of rurther margins ( to cover, for one year after the conclusion of the war, the Bank of Englanc will advance to the lenders to the extent of 60 per cent, of the value oi tne securities held for any advance interest to be at the rate or"l per cent above the Bank ot England rate, witl a minimum or 5 per cent. Tins arrangement will no uoubt afford a further large measure of relief to bankers and others who may have advance; current upon sue a securities. i Ihe. Bank or New Zealand, fortunately,_ is little concerned in business of this class, as it has been againsi our policy to undertake it. j Viewing our general position, we may be said to have come through the crucial stages of the crisis' with the minimum of inconvenience and loss, 'l'he 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 iarge balance of cash at the Bank ol England. Moreover, conformably with our policy, the London portion of our business is invariably conducted Avith , a view to ready convertibility, and our advances there are 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 be- . came lictuid. I 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 I cud not avail of the British moratorium, ! but met all our liabilities as they matured; and as far as we can see at present, the losses that we are likely to sustain on our purely London business are i ractically nil. There has been of course a temporary depreciation in the value of all investment stocks helu, and while our present intention is to make full provision for the shrinkage in value as soon as the ret sumption of marekt quotations enables i us to assess the amount of it we in 'no sense regard it as a loss 'for we feel confident ihat when the existing , troubles have passed away, the British , Empire will emerge greatly strength- . ened m credit and reputation and in j other ways materially benefited', so that the market prices of all her securities • may then be expected to take a steady i iipward course | That the Bank should be able to , weather so severe a- storm with practirally no dan:age is, lam sure you will 1 agree, conclusive testimony to the soundness of the business we transact; and the wisdom of our policy in this j respect has in the recent upheaval been made more abundantly evident than ever before. I It affords me much satisfaction to be able to emphasise the fact in so complete a r.ianner, because it has lecome the fatliion in some uninformed quarters to denounce that policy in somewhat strong terms, and to suggest

that the large amounts we sometimes show as being held by the bank in London are in speculative investments a c tended with very considerable risks. Had such been the case, you may depend vi.-on it our position at the pre-jent tune would have been very different from what it actually is, and the effects of the trouble would have been felt in tlus Dominion much more keenly than .have been. As matters stand, however, the command of financial i'..c.;,,it:e-s at such a time has enabled us to carry on our business with the smallest measure of disorganisation, and the minimum of incon\ei.ience to our customers. Naturally, we have had to observe a restrictive policy in the matter of advances, otherI.vise commitments might have been incurred which would have absorbed our liquid resources to an extent that would not, in the circum--r.tu.ces, have been prudent; but we have done our best, within safe lines, to meet all reasonable demands. In point of fact, we believe that we have succeeded in meeting all legitimate requirements; and I have little doubt tnat our customers generally recognise this and are satisfied. The same remark applies in the case of the other Banks in the Dominion, each and all of whom have apparently done what they could to ease the 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 have been reduced during the 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. Too much stress cannot be placed upon the magnificent service rendered in the relief of the position by the British Government. It faced the crisis in a courageous and statesmanlike manner, and with prompt and firm determination threw the whole strength of the country's resources and credit to the support" of its finance. The deadlock was in that vay quickly ended. As a consequence of what the Government did, and is doing, trade in Britain is again active, and unemployment and distress is at a minimum —much below even what the most sanguine optimist would have regarded as possible in so short a space of time and in the face of such adverse conditions. « The War. —Meantime the war drags its weary length along. As to the outcome of- it, all of us, of course, have . only one hope and one belief —namely, [ that the cause of right and freedom in j which our Empire: has taken up arms will nay must, in the end triumph. The solidarity displayed by every portion of the Empire in such a grave crisis has been at once an- inspiration and a source of confidence. In the face of the common enemy political differences and internal dissensions have disappeared, and the whole Emj pi re is now united as it never was ' before. J I do not overlook the treasonable ! conduct of a small and contemptible ! section of the South Ar'-'ican boer populace who, by the influent and sup--1 port of the enemy, were induced to ' raise the standard of revolt; but we can afford to ignore them as we take a wide review of the many peoples : claiming one sovereignty under the j British flag, and now loyally co-operat- ' ing in strenuous endeavour and firm ■determination to i-.ee the struggle '' th rough to a satisfactory conclusion. That that conclusion may soon be I reached is the fervent wish of us all, '. and that as the res.ti.lt of this stupendJ oils loss of .'ife -und treasure there may ! come the growth of a saner and happier 1 international sentiment which shall dei cree that, in this twentieth century i of. Christian civilisation, there shall be no recrudescence of such military ; and naval development on the part of ' any nation as shall place the peace of the world again in jeopardy. I The British Empire's present experience is fraught with an important economic lesso.i for ourselves and for every other component part of the Empire. The most cursory reflection ! will serve to show that the bloated ■and hypertrophied military system oi ' Germany, which has for years" been : the menace of the civilised world, has ; drawn the means of its sustenance and j development largely from the British Empire itself. The ports of this EraI pire the world over have been freely open to German merchandise, the unsuspecting Britisher has traded with the German, and British money has found its way into the German Exchequer and helped in the construction of the huge fighting machine which the German war oligarchs have now turned against us in a mighty effort to bring about our Empires-destruct-ion. This is 1 think at the moment generally well recognised. The feeling is expressing itself in the prevailing prejudice against German goods and- ail things German. But people have short memories; and when the present struggle, and the racial animosities that it has evoked, have passed into history, there is a danger that this important point may be lost sight of, and that we may fall back again into the old groove and be found engaging again in the foolish business of nourishing the' enemy that has injured us. The remedy for this is to turn our attention promptly and resolutely to the development of trade within the Empire, and in that way assist and benefit our own kith and kin. Let both the State and the individual, in every quarter of the Empire, seek thus to encourage the growth of the Empire's own industries and commerce. Let vi as far as possible, buy in the Empire's markets, so tbat no alien and hostile race shall ever again enrich itself at our expense, and develop its baleful strength, as in this case, through our folly. The change thus necessitated in our methods of obtaining supplies of manufactured articles to meet otir requirements may afford opportunities for the establishment and encouragement of new local industries in the Dominion, by which our own people may be benefited. Any such movement, if based upon sound economic principles, should commend itself to our sympathy and support. It is impossible to arrive at any trustworthy conclusion with regard to the duration of the present momentous struggle. When experts differ, it would be presumptuous for a tyro to attempt to prophesy. But I may observe, in passing, that if the supply of soldiers were the only consideration, doubtless Germany would be able to prolong the war for an indefinite period. I cannot, however, help thinking that the huge economic and financial difficulties, which Germany must shortly have to face, will prove a very important factor in determining the duration of the war. Financially and economically she and her ally have, for some time, been practically isolated from the rest of the world. Her commerce is dead, her industries are at a standstill, and the enormous amount of capital sunk in both commerce and industries is totally unproductive. The economic waste from this source alone must be something appalling. But when we add to this *the cost of the maintenance of her immense armies in

the field—the pay and the provisioning of the soldiers, the enormous necessary supplies of ammuniton, guns, and other weapons of war, etc., etc.—it seems that sooner or later an end must be reached by the process of internal exhaustion. Surrounded on all sides, by enemies, and with her -seas closed by hostile fleets, outside supplies, in the quantities required, would seem to be quite unobtainable. It will interest you to learn that- according to the German Year Book for 1913, the imports into Germany in 1912 totalled £534,570,000. These came principally from the United States, Russia, Great Britain, France, and India, and were represented in great part by foodstuffs. These sources-of supply are now, of course, absolutely cut off. Further, her export trade, which in 1912 amounted to £447,-------800,000, is also, completely paralysed. Already we hear that the German people are beginning ,to stagger under "the stupendous burden imposed upon them. It was announced, only a few weeks ago. that the bankruptcies in Hamburg alone, sinec the opening of the war, showed deficiencies aggregating £25,000,000. The partial success of Germany's last war Joan is reported to have been achieved only by commandeering the resources of the banks, many of which, if there be truth in the rumor, must be now practically in a bankrupt condition. Geld payments have ceased throughout the country: 'an incovertible paper currency in notes of the Reichsbank is the legal tender medium, and is rapidly depreciating in value. A couple of months ago, these notes were at a discount of 35 per cent. Some traders had declined to receive them in payment, and the German Government had in consequence taken steps to close their shops.

Any sane ruler would see that all this is the '.'writing on the wall" which spells, in large letters, disaster and misery for the German nation; but the dangerous monomaniacs who at' present guide tlie destinies of the unfortunate German people are obsessed by an irresistible craving for martial glory, and are blind alike to the criminal wickedness of their conduct and to the absolute futility of their aim 3 They fail to see that the whole oivil.sed world must, if necessary, take up armsin self-defence for the purpose of curbing a vain and covetous nation which, by means of the military ascendency and superior brute force which it believes itself to possess, and the application of scientific ingenuity to the production of the most powerful and ■destructive implements of war, is seeking to lay the world at its feet.

A policy having such a goal before it must assure its own final and everlasting defeat.

A few weeks ago, a well-informed and reliable London financial journal when discussing, from the financial standooint, the improbability of a greatly protracted war, remarked as follows

' "According to a Swiss computation, there were in Europe at the end of August about 20,400,000 men actually under arms. At the beginning of October Germany (on the same authority) had under arms _7" army corps of her regular troops end an equal number of reserves, making a total of 54 army corps, say, 2,160,000 men. Of these, 24 army corps were in France, 6 in Belgium and Alsace, 13 in East Prussia, and 11 between Thorn and Cracow. There are, in addition, assumed to be 1,500,000 Landsturm and volunteers serving in the interior, while 600,000 fresh recruits are reported to be in training sufficiently advanced for them to be ready for service in November. Even the neutral States, it was estimated had mobilised more than. 2,000,000 soldiers on a war footing. "For each -soldier, including initial and consequent expenses, ten shillings per day is usually counted in an estimate. This gives a total daily war expense in Europe of over ten millions .sterling (or an annual outgo of, say, £3,650.000,000). Of this, Germany would provide tor ■some £2,200,000 per day; Austria, for £1,600,000; Russia, for £2,100,----000; and France, for £1,600,000. Even Switzerland was then spending some £60,000 daily, and Holland probably £100,000. "Certainly, if finance is the mam nerve of modern war, .this Armageddon cannot last many months." My opinion is that the end will come sooner than has been expected, and possibly with a dramatic suddenness that will astonish us.

In pleasing contrast with the crippled condition of Germany's war finance, as evidenced by the conditions

id results of her last loan flotation, there came to us a few days ago the gratifying news of the unqualified success of the first British war loan of £350,000,000, offered for subscription about tlie middle of November. Prior to that the Chancellor of the Exchequer .had been, providing for requirements by the issue of six months Treasury Bills, of which about £15,----000,000 fortnightly had been offered with fair regularity since the opening of the war. A loan, however, was necessary for the purpose of funding these floating liabilities, and providing for further requirements. The loan has a currency of 13 years, the rate of interest 3^ per cent., and issue price £95 per £100, which places the net yield (including redemption) at practically 4 per cent, per annum. Exceptionally liberal advantages were offered to subscribers, in that the Government had concluded an arrangement ■vith the Bank of England under which the Bank will advance against the stock of the loan at any time during a period of three years from the date of issue, at a rate of interest 1 per cent, below the Bank rate for the time being, and up to the full issue price of the stock, i.e., 95 per cent, of face value.

It is understood that no less than £100,000,000 of the stock was taken up before the public subscription lists were opened, and this no doubt contributed to the complete success of the issue.

It is satisfactory to learn i^-at the British Chancellor estimates that this loan will provide for all his requirements up to July next, by which time let us hope that the end of the war, if not actually reached; will be well in sight.

London Board.—You will, I am sure, feel with me that a more than usually cordial recognition of the services rendered by the London Board to the Bank is called for on this occasion. It is not our custom to make such recognition at our half-yearly general meeting, but the circumstances this year are exceptional. In conserving the Bank's financial position and protecting your interests, the local directors in London have passed through a most strenuous time; and the easy position in which the Bank stands today is largely the result of their foresight and prudence in the conduct of our affairs in London. It affords me much pleasure to record our appreciation of the Exceptionally valuable character of their work during the half-year.

I am also very pleased to announce that, since we last met you, the London Board has been strengthened by the appointment of Sir James Mills, K.C.M.G.. as a local director.

Sir James' name and personality is familiar to most people throughout the length and breadth of the Dominion; and as Managing Director (until

recently), and still Chairman, of the Union Steam Ship Co., of N.Z., Ltd he has been closely identified with the industrial and social development of cue Dominion for very many years. I am sure you will agree .with me. when I say tnat we are fortunate in having secured a gentleman so well qualified to fill the post of a local director in London.

Sir James takes the seat formerly occupied by the late Mr R. H; Glyn." General.—Within the Dominion,'the ul-effects of the state of war are not very apparent. The withdrawal of tbe Expeditionary Force of 10,000 men has of course affected the labor market to some extent, and many businesses are working shorthanded "in order to keep places open for the men on their return. The industries of the Dominion are not likely to be adversely airected by the war, but rather the reverse", x rices for our staple products—wool, meat, butter and cheese—are satisfactory, and a large output is assured. If adequate facilities be provided for the conveyance of our products to the remunerative markets that are awaiting them,- a prosperous season will be experienced. Shortage of carriers was •t 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 the export of all produce available.

Until January, at any rate, adequate shipping facilities appear to be provided, and we are glad to have the assurance of the Eight Honorable the Prime Minister, after communicating with tho 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 tbe remainder of the season.

Given the maintenance oi full shipping facilities and a continuance of good prices for our products, which seems likely? our exports for the current year may be expected to show a value at least equal to those ot iast •season, which, it- will be remembeied, approximated £25,000,000. " 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 for 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 people—both voluntary and compulsory—following upon Ihe state of war which exists and the consequent financial stringency, will result in a substantial diminution of the deiland 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 ■shoAA-n 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 Aye shall be in a position to more easily provide for the special outlay connected with the national Avar commitments, and for private benefac•ons, which have been on a commendablv liberal scale.

The circumstances all point to the desirableness ot 'discretion in the matter of expenditure both public*and private; and, Avhilst the hoarding of money is to be most strongly deprecated, the husbanding of resources is both highly expedient and commendable.

In view of the condition of the noney market, it is . satisfactory to learn that the New Zealand Government has completed arrangements for providing the funds required to meet maturing loans and to carry on the necessary service's of the Dominion. The British. Government has, we understand, intimated its readiness to as-Ay-it the nation's oversea Dominions by advancing to them a portion at any rate of the moneys which they may require during the currency of the war. In this respect the British Government has again shown a masterly grasp of the situation, and has thus merited the unstinted confidence and support of the Empire beyond the seas in this the greatest' crisis of the Empire's history. Our own Government is also to be congratulated upon the prompt; and unhesitating manner in which it pledged itself, to the support of tlie 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 yeans to come our sons and daughters will, I doubt not, reap the rich harvest of the good Imperial seed which is now being sown.

Meanwhile, the value of money | locally is above normal, and likely to j continue so for some time. At Home, I 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 favorable 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 Joan 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. Staff.—Large numbers of our officers volunteered for oversea military service as soon as it became known that an Expeditionary Force was being organised. Eighty-three men were accepted for service. This is equal to about 8 per cent, of the whole staff. As a consequence, holiday leave to be staff remaining on duty has 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 are six months on halfway with reinstatement in the -service en return if physically fit for duty. You will, I am sure, concur in the Board's decision to deal thus liberally with men who have voluntarily placed j their .services at the disposal of the Empire in its hour of need. Deed of Settlement.—When we last met you, it was our intention to have placed before you at this meeting the proposals for amendment in the Deed "f Settlement, to bring -it into conformity with the existing -statutory position. Tlie outbreak of war, with its accompanying interruption of mail sservices and facilities for communication, convinced us that the time at our 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. We therefore decided to delay submission of the proposals to you, and .they are accordingIv not being put before you at this meeting. The work is, however, well forward' and by the time the next ordinary general meetins arrives, we