BANK OF NEW SOUTH WALES.

Manawatu Standard, Volume LII, Issue 2, 2 December 1931, Page 5

BANK OF NEW SOUTH WALES.

"The balance-sheet shows a marked improvement in the liquidity and strength of the bank’s position,” stated Mr Thomas Buckland, president of the Bank of New South Wales, in moving tire adoption of tho report and balance-sheet at the annual meeting of the bank at Sydney on November 27. “This,” he added, “is to some extent a reflection of two important factors operating generally throughout the | community. All Governments have to a greater or less degree attempted j their parts under the Premiers’ I Plan. They are, however, still finan- | cing on an inflationary basis and will ; continue to do so until Budgets indivii dually and as a whole are balanced and kept so. All producers and business men have been readjusting their affairs :to lower prices and a reduced national income. Both influences have co- ■ operated to bring about an increase iin deposits of £3,104,000 and a dei crease in advances, etc., of £5,291,000. I The proportion of fixed to total deposits eontimies to increase—a result of sluggish trade. The bank freely extended accommodation to its customers during the slump in prices. This ran into very large figures. By realisation of stocks to meet a lower turnover certain sections of our customers have now reduced their demands upon us. “No Government is indebted to tho bank on overdraft. Any resistance given to Governments is represented by readily realisable securities, mostly Treasury Bills. British. Treasury Bills are saleable at all times in the London Money. Market while Commonwealth Treasury Bills may be rediscounted with the Commonwealth Bank. Liquid assets are greater by £6,300.000, cash items having increased £1.220,C00 and Treasury Bills, both British and Commonwealth, £6,150,000. The decrease in Government funded securities, £626.000, is partly in Australian and partly in New Zealand issue.

“The balance-sheet total, £88,028,000, is some £1.209.000 greater than last year. Contingent liabilities, £2,-

082,000, are lower by £362,000 —a further evidence of reduced turnover. This item largely reflects the increase or decrease in external trade. . When this amount is added to both sides of the balance-sheet the aggregate exceeds £90,000,000, nearly equal to our aggregate of two years ago. The year’s profit at £565,000 show a further reduction for the year. Revenue . has been sacrificed in providing relief to our borrowing customers. Contributions towards the restoration of prosperity and the rehabilitation of public finances have made heavy inroads into the gross income of the bank while we have had no relief during the year on the expenditure side, indeed taxation has considerably increased. The financial institutions of Australia are hampered in their policies because the constitution of the Commonwealth Bank still savours of political control. Judged by all the canons of central reserve banking it cannot function satisfactorily as the central reserve bank for Australia until its constitution and administration are freed entirely from any possibility or suggestion of political interference. Speaking generally it may be said that the seasonal prospects are good, and that the year past has been favourable from a primary producer’s point of view. “The directors have not hesitated to use all tlie influence at their command to bring to a successful issue every plan which they held to mnke for the sound recovery not only of the Commonwealth of Australia, but also of the Dominion of New Zealand. During the year for which the accounts are now presented the bank has paid taxation to an amount which equals a dividend of 6.13 per cent, on its capital of £7,500.000. It has also contributed voluntarily and in full measure to the rehabilitation of public finances by other means. The whole of the bank’s holding in the internal debt of Australia was converted at the very outset of the conversion campaign, and so were file individual private holdings of your directors. We can look to some relief during the current year from tho reduced, rates paid for fixed deposits and from the reduced scale

of salaries operating throughout th« whole service.

“Attempts are frequently made to place the whole of the responsibility for the present depression at the door of monetary policy. It has been stated that the banks have deliberately brought about the present crisis, the suggestion being that banks somehow profit in periods when trade and industry are depressed. It must be apparent, however, that banking business suffers along with the business of the general community. “The Dominions need, in order to continue their success in finding sensible compromises and adjustments to a changing world, no restriction either of credit or of enterprise, but scope 'and freedom to venture. The Bank of New South Wales is prepared to support the Commonwealth Bank to the full -in seeking such scoope. Such; a policy would be.in keeping with tho historic origins of both banks as institutions created by authority to guide the free activities of the Australian people. The bank isready to support private efforts t 6 restore industry and employment. The condition upon which this can be done is that such propositions are sound and profitable. Without fulfilment .of these conditions any support given would entail loss, and be to the disadvantage of both tire depositor and the community. To provide this profit our costs, however, made up, must be brought within the measure of the receipts for our produce before we can look for substantial improvement. To be permanent and provide a reasonably sure foundation on which to build, any increase in the. proceeds for our produce should be in gold prices. The present acceptable rise in prices in Australian currency is due to the depreciation in the British and Australian currencies. A drop in the exchange rate without a marked rise in gold prices would have the effect of starting a fresh and oppressive deflationary process.” Reference is made in the conclusion of the address of the amalgamation of thp Australian Bank of Commerce with, the Bank of New South Wales.