nELSON Evening Mail FRIDAY, JUNE 19, 1951 POSITION REVIEWED BY A VETERAN BANKER

Nelson Evening Mail, Volume LXIV, 19 June 1931, Page 4

nELSON Evening Mail FRIDAY, JUNE 19, 1951 POSITION REVIEWED BY A VETERAN BANKER

TUB note, of caution .sounded by Sir George Elliot as chairman of the Bank of New Zealand at this time last year, reiterating what had been said in the immediately preceding years, was not adequately heeded. Advocacy of retrenchment, and the carrying out of economies was not popular. That it was justified has been sadly demonstrated by developments in the, passage of time. We endorsed the remarks when they were made, and recall thorn to-day not in justification of them or of our attiture, but to emphasise that our bankers,

as events over many years have shown, lire well qualified to speak on the subject of the country’s finance, and tho prospects of the future. r llie history of banking in New Zealand, as we have commented before, lias clearly demonstrated that our leading bankers, uninfluenced by the. exigencies of purely party politics, and actuated solely by a desire, to preserve a. condition of sound finance in the interests of the banks—interests which coincide with the interests of the country and its financial stability—do not speak without having given the fullest consideration to all the factors operating for good or ill. For this reason we. commend to tho careful attention of our readers the annual address given this morning to tho proprietors of the Bank of Now Zealand by Mr William Watson, who succeeded Sir George Elliot as chairman when the, hitler resigned that position during the

Mr Watson is a veteran banker; indeed one speaker at to-day s meeting referred to him as the doyen of hankers in Australia and New Zealand. It may be recalled that many years ago be was vailed to the Bar of the House and was fined for refusing to divulge certain information that, lie regarded as strictly confidential. The incident is merely mentioned to emphasise bis long experience of banking and his record lor strict integrity. He is not the typo, of man that speaks idly or for merely selfish purposes. In comparison with the last annual address, Mr Watson s is perhaps less comprehensive. Nevertheless it covers a. wide area. It deals with production and industry, gives comparative figures, and stresses the desirable decrease in imports—due largely to a falling off in the buying of luxury goods. The relations of gold to currency are informatively touched upon, together with the dangers of inflation which appear to bo recognised more fully by the two leading political parties in New Zealand than they are by some Governments in Australia. The danger of inordinate taxation —one of the causes of unemployment because of its crippling effect upon industry—is also referred to. Mr Watson explains why the hanking system in New Zealand, a. young country, is necessarily different from the British system. He expresses a hope that it may he found possible to reduce the rates of interest, but states that this is a matter that does not rest with the Banks alone.

In regard to the acute question of rates of exchange, it is staled by tho chairman that no reduction is in close sight, and tho point frequently mentioned in these columns that tho banks do not derive any advantage either from a high buying or a high selling .rate, is reiterated. The one satisfactory feature in this connection is that some advantage of the prcsonl abnormal exchange rates on London is being reaped by tho producing and also tho manufacturing industries of tho Dominion, though this advantage is considerably nullified by the increased rate paid by importers'which eventually becomes a charge upon the whole community, including farmers. So far as the Bank of New Zealand itself is concerned, it is announced that the profit for the year was £102,720 Jess Ilian in the previous '.year, a decrease partly due to increased taxation, and to increase in had debts. These are two factors being experienced by most business concerns nowadays. Nevertheless, there is cause for much satisfaction (hat, after making provision for emergencies, if is possible 1o declare a dividend and bonus at the same rate as last year—a result largely due, as Sir Harold Beauchamp, an ex-chairman, pointed out, to the sound policy pursued in the past of building up substantial reserves.

Mr Watson, in bis address, also deals with general economic conditions in terms fairly familiar to those who have followed the courso of events as described by economists and other writers and speakers. He does not exaggerate when lie declares that by the time the ebuntry settles down to a sound basis, very many 1 millions will have been written off existing values. As lie. emphasises, while the recent “cut’’ of ten per cent, in salaries and wages will, in many im stances, inflict more or less hardship, a great many persons have been obliged to face losses far in excess of ten per cent. It is generally recognised by this time (hat the period of recovery from the existing depression must he slow, and cannot he attained, without hardships. But that there, will bo recovery may bo confidently relied oil. With this hopeful nolo which Mr Watson sounds we fully concur. Most people will agree that New Zealand might have clone better in the past lo prepare for had times, but it is futile to dwell upon that aspect except lo stress the lessons it teaches. As the chairman says: “By wiser action and living within national means, better times will assuredly come, and the sooner the action, the, sooner the result.”