Manawatu Evening Standard. WEDNESDAY, JUNE 17, 1936. BANKING MATTERS.

Manawatu Standard, Volume LVI, Issue 168, 17 June 1936, Page 10

Manawatu Evening Standard. WEDNESDAY, JUNE 17, 1936. BANKING MATTERS.

At the annual meeting of shareholders of the Bank oi New Zealand held in Wellington on l'riday, the chairman (Sir George Elliot), following precedent, ctelivered an address dealing with the affairs of the Bank in a comprehensive review, the recent disturbing legislation and also some reminiscences dealing with the events of 1894. liis references to the legislation passed by Parliament were explanatory and not critical. He explained the effect of converting the Reserve Bank into a State Bank with control of the currency and the London exchange; the Primary Products Marketing Act, which is “to make better provision for the marketing of dairy produce, and other primary products so as to ensure for producers an adequate remuneration for the services rendered by them to the community.” As the chairman pointed out “one effect of the measure will be that from August 1' next the financing of all dairy produce exported from New Zealand will be undertaken by the Reserve Bank of' New Zealand on behalf of the New Zealand Government instead of by the trading banks on account of the dairy companies in the past.” We have yet to realise the effects of this drastic change. There is no doubt that the trading banks have played an important part in financing and fostering the dairy industry, and it remains to be seen how the industry will be affected when tied up in red-tape. The banks lose the dairy produce finance and the London credits, which must necessitate adjustments, one being the closing down of some of the banks’ branches. It was on the evening of June 30, 1894, that the Act was passed guaranteeing the Bank of New Zealand 412,000,000. The banking position then was very rocky; it was a case of the State coming to the aid of the Bank or the Bank closing its doors. Had the latter occurred it would have upset the whole economic position of the then young colony. This was recognised by the Government of the day of which Mr Seddon was Premier and Sir Joseph Ward the Colonial Secretary. The Bank did not receive a single penny from the Government, but the Bank was authorised to raise a loan of £2,006,000 in London, which the Government guaranteed as to principal and interest. The State did not lose a single penny piece through its action ; on the contrary it has for years received a substantial revenue through its shareholding to which it was not really entitled, for its services to the bank were entirely in the interests of the country and not, the Bank. In those dark days of depression—and it was a relatively more severe depression than the one now current —few people thought that the Bank would recover. We know now

that it has clone so ami the secret of its recovery has been sound and efficient banking management. The lessons of the past were thoroughly learned, and the new management adopted, or rather returned to an. observance of true banking principles with the happiest results. Lorly-two years of good, sound management has placed the Bank of New Zealand where it is to-day, and its future depends not on banking management, but on the vagaries of politics.