BANK OF NEW ZEALAND.

Marlborough Express, Volume XLIX, Issue 286, 3 December 1915, Page 6

BANK OF NEW ZEALAND.

HALF-YEIARLY 'MEEHCING

The half-yearly meeting of the Bank oC New Zealana -was held at Wellington to-day the-chairman of directors (fvlr Harold Beauchamp) presiding. THE OUTLOOK.

Tn tlio course of his address the chairman niter reviewing the finan--c>al J situation created by the war (reported elsewhere in this issue) said :— Prospects continue good for all deb< riptions of the Dominion's primary p oducts. A wider market for wool, }>v~ -been assured by the conditional, r-miovnl of the"' embargo placed, j shortly after the opening of the war, oa exports of wool, to neutral countries. The export of wool to certain naofcrnl countries can novv be arranged upon compliance with such formalities as are deemed necessary for the purpose of assuring that the v/00l will not reach the hands of the oaemy. The effect of this lias been tn eolargo the area of competition, and to appreciably stimulate prices, more particularly for the class required by American buyers-; that purchased on Bradford account has not advanced to o correspondingly high level The arrangement under ,which the vliole of the Dominion's meat export i.-. commandeered by the Government "still continues in operation, and, I bcliave, has worked on the' whole smoothly and quite satisfactorily. The . s grgregrita payments made by the lm£!?ria!"Government in this connection and disbursed by the Dominion Government on its account, amount, up to 24th ultimo., to £5,914,624. ' The pressure on ' storage space and the shortage of insulated steamers to carry the meat away, which were features of the last season's export, are not likoly to recur this year. Additional storage will bo available in the Dominiqn—the result of fresh constructions'completed or in progress— ia addition to which the prospective supply of carriers is said to be adequate. An analogous call has also be<*n made upon the cheese product of the country, the Government having, it ,ir understood. Imperial orders to Voquisition 15,000 lons of cheese, to !ihe value of about £1,000,000 in all.

EXPORTS AND IMPORTS. The trade returns exhibit a marked "fluctuation in favor of the Dominion. -3£oT.the year .ended ' 30th September last the exports were £29,710,000, and tlie imports £19,786,000, leaving a surplus of £9,924,000 in iavor of exports. The figures compare as follows with those for theyear ended 30th September, 1914:—Exports: 30th September, 1914, £23,759,000; 191fi. £29,710,000; increase, £5,951,000." Imports: 30th September, 1914, £21,057,000; 1915, £19,786,000; decrease, " £1,271,000. Together, the figures represent a net Improvement during the year in the Dominion's financial position of JB7;222 : 000. More than half of the increased value of the exports is due to the higher *■ values that have been ruling, and the rest represents increase in the quantity exported. 'These are very satisfactory figures, but the growth, as far as dependent upon increased value, is of course quite abnormal, and due to the ex- , csptional conditions at present existing, which will undoubtedly pass away upon the termiantion of the war, or shortly thereafter. Ct .should be hardly necessary for me to utter a word of warning against fcfre assumption of liabilities, dependant for their satisfactory liquidation upon maintenance, for any length of time, of the present high range of prices. It would be folly to assume onrj moment that such abnormal piices can continue after the present huge expenditure of borrowed incidental to the war comes to an end. Jb is almost certain that immediately the end of the war is reached prices will drop heavily, and the recoil may' e<i.rry us to a point of depression as abnormal as that of the present inflation. It will be wise policy on the part; of everyone to keep the probability of "lean years" to come steadily m view. REVENGE AND EXPENDITURE.

The revenue of the Dominion is well maintained* and is exceeding the estimate made -by they Minister "for ..Einan-ce- : for Budget purposes,, in which the estimated revenue for 19i5----mm was set down at £1J,676;254;;tis Against actual revenue .-for 1914^1915, £12,443,525. / T^ie actual 'revemfe for tne first seven months of the financial ymr i.e., to 31st October las%- *as £6,099,402, whisb, oomgrares&wife £6,02-2,836 for the cprrespohdinrt period of 1914—a surplus of £76,566: The- estimated eXpenditure for 1915-16 is £12,653,242. which leaves a deficiency on estimated revenue of £827,941. This is without maJdrug provision for war pensions, and for Interest and sinking fund on war loans; The former are estimated at .•£■1,000.000 per annum, and the latter at £700,000 per annum, but the full amount will not fall to be provided, during the current fiscal yeaav In view of the above, additional taxation has^ of course become necesoairy. Inci-eases in income tax, in stamp duties (including a mortgage tax of 5s per cent.), and in a few lui.es of Customs and Excise, togetiher with an increase in the rates of the post and telegraph, and railway services, have accordingly been made, and these it is believed will suffice-to ■cover the extraordinary additional expenditure referred., to, being estimated to produce £2,032,600 of extra revenue. ,

BANKS' TAXATION

In this readjustment of taxation, necessitated by the financial situation resulting from ihc war, the banks have,.! think,,come in for more than their fair share of the additional impost. I -may explain that banks are assessed for income tax, not upon their actual earnings, but upon a hypothetical income based upon a pwrcentage of their aggregate, assets and liabilities within the Dominion. 'IMs percentage was formerly 15s, l)ttfc under the recent Finance Act it has been increased to 30s per cent. Our hypothetical taxable income has therefore/ at one stroke, been

doubled. Rut this is not all. The (ax we have to pay has also been doubled. It was formerly Is, 4d in the £; ib is now 2s 8d in the £. The "practical effeqt, therefore, of these arrangements is, you will see, that our income tax has been quadrupled, and-that we shall now hiaiye to pay at the rate of 5s 4d where1 previously we paid only Is 4d. Hitherto our income tax has .amounted to about £15,600 per annum. In future it will be about £62,000 per annum. Added to laaid tax and note tax our total contribution to the taxation of the country will reach probably about £120,000 per annum. We are not complaining. Tim bank is doing well and therefore," meantime, ■ cheerfully shoulders the burden laid upon it. But we feel it an unduly oppressive burden compared with that laid upon others, and we therefore look forward to the time when some remission may be! allow-. able. The anomalous position js that, while it purports to be an "income tax," it is payable altogether independently of our actual ..income.''' It is quite conceivable that a bank might sustain losses which would leave ii practically without income for soni© particular year, but that would not relieve it of liability to pay income, tax/under this assessment. Viewed from that standpoint, I -think most people will regard the basis of the tax as inequitable. However, as I havo said, in existing circumstances, whilst we earn wo will cheerfully pay; hut, under other conditions, we contend thait Parliament should, for the purpose of taxation, assess our profits upon a more liberal and , equitablo basis.

I THE 5 DOMINION'S FINANCIAL

POSITION

The artificial .'prosperity', created hoi*e as iri-the Old Country, by the expenditure irieident. to. the war, con4iinues.:; to-'.jbe-.xeflectfed.:in the banking retiirns of the Dominion.'-The returns furnished :to the Government of Quarterly, average banking figures^ at 30th September last represent an improvement of the position between the public;-and the banks, amounting to upwards of. £5,2-30,000 during the year. It is safe to say that this is an Unprecedented movement in the p banking experience of the Dominion. Never before has the public been in such an easy financial position or in command of such ample resources.

The Post Office savings bank figures tell the same story. For the year ended 30th September last, the Post Office deposit* amounted to £12,943,----458, and withdrawals to £10,356,942, sliowing an excess of deposits over withdrawals of £2,586,516.

The position in a measure indicates a slackening of industrial enterprise, •and. a heayy 'drop in imports—tlw fatter being due to the inability of manufacturers in the United Kingdom to execute orders owing to shortage of labor, and''to,, inadequate transit facilities. It is well, however, that our financial situation is so easy, for it places; us in a position ' to bear our share of the war expenditure".—local and Imperial—without difficulty. The abnormal profits that are being made by the producers of this country and others as the result of the war should be freely placed at the disposal of the Empire by subscription to war loans —of otherwise —in order that there may be no lack of financial strength in pressing tho war to a triumphant conclusion-. There is, I am glad to say, evidence that otir people as a whole feel and, act accordingly. The large donations 'that have been made to war and benevolent funds testify to th-o public recognition of the obligation,

and the recent success of the Govern-' ment's local loan "of £2,000,000, which was largely • oversubscribed, furnishes strong additional testimony. We .subscribed for and obtained a substantial amount of this loan.

WAR FUNDS 'CONTRIBUTION. - In addition to the subscriptions it has .already given to the various patriotic: funds, the Board has carefully debated the question of making a further .substantial ,: ■contribution to the ■National'"War- Fund, for the relief of wounded -soldiers and their depend-1 ants/ We liaye coirie to the conclusion that the bank should make some such contribution but, before actually deciding to do so, we have thought it fitting to refer to the matter at this meeting in order' to ascertain whether our proposal is in;..harmony with your views. The amount we would'propose is £10,000 and, unless an adverse resolution is proposed at th; meeting and commands_ substantial support from the proprietors, it isrcy'/ir intention. to':vote that amount as a donation to the National Fund, provided we are satisfied as to the manner in which the Fund is to be administered. Assuming that no general dissent is expressed, I think it should be clearly understood that,' if the necessity exists, the bank wilt not hesitate to make a further contribution to the National Fund between this and the date of our "next meeting—the .amount, of such further contribution to be' left in the discretion of the Board.

INTERIM DIVIDEND

The profits for the half-year ended 30th .September last have been quite satisfactory, and the Board have felt: fully- .justified'in declaring the. usual interim dividend of 6 per cent, on the capital paid up in respect of the preference and ordinary shares.