BANK OF NEW ZEALAND.

New Zealand Herald, Volume XLVI, Issue 14235, 4 December 1909, Page 8

BANK OF NEW ZEALAND.

SATISFACTORY HALF-YEAR,

INCREASED TAXATION.

BETTER TRADE CONDITIONS.

RECORD EXPORTS PREDICTED.

[by telegraph.— association.]

Wellington, Friday. The half-yearly meeting of the Bank of

New Zealand was held to-day. Mr. H. Beauchamp, chairman of di rectors, said : —

At our half-yearly meeting no statement of acounts, as you are aware, is presented. Our principal business is the election of a director, and for that position Mr. Martin Kennedy—who has occupied a seat on the board continuously as your representative since 1894 again offers his services. There being no other candidate, I have much pleasure in declaring Mr. Kennedy duly elected.

When addressing you in June last I mentioned that, consequent upon the conservative policy then being pursued by this and other banks trading within the Dominion, you should be prepared for a diminution in our profits. Our accounts for the half-year ended September 30 show that these anticipations were realised. Still, the results for the period under review arc gratifying, and I have no doubt that, at tho. close of the present financial year, we shall be able to transfer a substantial amount to our reserve fund, and recommend tho payment of a dividend and bonus equal to that you received for the year ended March 31, 1909. In the meantime for the half-year ended September 30 the board has declared an interim dividend of 5 per cent, to the holders of ordinary shares, and a similar amount in respect to the preference shares issued to the Crown. This dividend will be payable at the head office on Monday next, 6th inst., and at branches on receipt of advice.

If the proposals now before Parliament regarding the taxation of banks become Jaw, this institution will be called upon to contribute a much larger sum than it now does. Calculated upon the present volume of the bank's business, the increase will amount to not less than £15,000 per annum. It may interest you to know that our taxation under all heads last year totalled £35,640. This, I may mention, included payments to municipalities and public bodies as well as to the General Government. IMPROVED MONEY MARKET. With these preliminary remarks I desire now to congratulate the shareholders of the bank, and the country generally, on the better and more promising monetary conditions that prevail to-day, and I do not think it would be improper on my part should I claim some credit for the banking institutions of New Zealand for the change that has taken place. A year ago the banks were criticised inside and outside of Parliament for not lending freely, notwithstanding that the aggregate of the advances and discounts, as at September 30, 1908, exhibited a very substantial increase on the figures of the previous year. A good many people are under the impression that it is the duty of the banks to advance against all and every kind of security. The sooner this impression is removed the better. That the bankers of the Dominion pursued the right course during the past 12 or 18 months is proved to some extent by the easier tendency that now prevails in the local money market. The banks are today in a much stronger position, and quite capable of furnishing all the legitimate banking accommodation that may be required. The bank returns for the past quarter show the strength, and we have but to compare the aggregate of the fixed and free deposits and the advances and discounts with the figures for the corresponding quarter last year to appreciate the point. They are as follows: —

FIXED AND FREE DEPOSITS. , 1909. 1908. Bank. 1 £ £ New Zealand ... ... 10,199,028 " 9.496,580 Union ... 2.790.889 2.786.534 New South Wales ... 3.009.416 3.057.706 Australasia ... ... 1,736.224 1.771,716 National 3.243,563 3,197,471 £20.979,120 £20.310.007 ®fote.—Thase figures do not include Government deposits.); ADVANCES AND DISCOUNTS. New Zealand ... ... 7,091.411 8,480.888 Union ... ... ... 3.160.610 3,371,232 New South Wales ... 2,505,193 3.211.533 Australasia 2,756,305 3,296,663 National ... ... ... 2,657.188 2,857,643 £18,170,707 £21,217,959 Last year the banks helped their customers liberally, and to this is largely due the fact that the depression was mild and of short duration. > THE WORLD'S TRADE. A distinct revival in trade appears to have set in all over the world, but particularly in the United States—of late years the storm-centre of the financial world! Every mail received recently has brought intelligence of renewed activity in one industry or another. The steel trades are particularly busy, the demand for steel rails being especially strong. The railroad companies of America have large development works in hand and in prospect, involving an expenditure of many million dollars. The Union Pacific and Southern Pacific railway systems have extensions aggregating approximately 20UO miles in course of construction. The production of pig iron in the United States is now up to the highest level of recent years. The report of the German steel syndicates states that the orders on their books on September 10 amounted to about 550,000 tons more than at the corresponding period last year. In Great Britain there is a distinct improvement. Shipbuilding main industry of the United Kingdom—is showing signs of recovery. According to Lloyd's Register of Shipbuilding Returns, the tonnage under construction on September 30 was ' about 32,000 tons more than that which was in hand at the end of the June quarter, and about 45,000 tons more than was building 12 months ago. The European and American money markets are at the moment rather high (the Bank of England rate now standing at 5 per cent.), but this is not an unusual feature at this time of the year. The Mother Country is unfortunately disturbed by a pending political crisis, for a general election is a great drawback to trade. NEW ZEALAND TRADE. The favourable conditions now apparent in Europe and America are being reflected in New Zealand. The export and import returns prove conclusively that the community lias profited by the temporary depression. Traders and producers have been forced to face the position, and their efforts have resulted in the equilibrium being restored. The exports show a substantial surplus over the imports, and, so far as we are concerned, that amounts to a favourable trade balance. This point may be emphasised by figures. The values of the exports and imports for the year ended September 30, 1909, compared with the figures for the two previous years, show as follows: — Exports. Imports. Tear. £ £ ... 19,891,845 16.071,887 1907-8 ... 370.587 17.750.868 1908-9 ... 18,700,155 14.916.005 (Note.— figures do not . elude specie.) It will be seen from the figures I have quoted that, while in 1907-8 the imports exceeded the exports by £1,380,281, for the year just ended the exports exceeded the imports by £3,784,151. We are in effect back to the position we were in in 1906-7, which was the year of our extreme prosperity. It is necessary for this country to show a substantial excess of exports over imports, because we have to meet annually a very large interest liability in connection with public and private indebtedness. We have, it would seem, practically recovered the ground lost in 1907-8, and we may now reasonably anticipate a further forward movement. There are. many

factors that warrant this expectation, i and it may be as well to make a brief reference to them.

INCREASING EXPORTS.

The prices obtained for the, first, of the new. season's clip sold in Wellington and in other parte of the Dominion, as well as at the sales held in the chief centres of the Commonwealth, indicate very clearly that, at the moment, there is a strong demand for this staple, as was anticipated by our London advices. Values realised at these sales were considerably in advance of those current a year ago, and latest London cables show that the market presents features of great strength. On November 24 we received a cablegram from our Londad office as follows —

"The sales have opened with strong competition and large attendance of buyers. The market is good, owing largely to shortness of supplies. Prices are {d to id per lb higher." Whether this firmness will be carried into the New Year is problematical, for woolmen are likely to bo guided by their wellknown maxim: "When wool is dear it is dangerous; when it is very dear it is very dangerous." Values are extremely high just now, and only twice in the last 19 years have they been quite as high. There may be a reaction, but in any case it is very probable that higher prices than last season will be obtained. New Zealand will produce a larger clip this year, and, with the higher range of values, quite two millions sterling should be added to the income of the producers. The exports of both butter and cheese 6how very substantial increases in quantity, and as values are practically up to the level of last year we are justified in anticipating a fairly substantial increase in the income from this source. Roughly, this increase should represent £250,000.

Mutton and lamb have recovered from the depression that affected them in July and August, and although the market is showing signs of weakening from pressure of supplies the Dominion should, with an increased output, be able to maintain its income from this branch of industry. There is some hope that developments in the chilled beef trade, with the aid of the Linley process, will take place in the near future. The success of the shipment by the Marathon from Queensland is very encouraging. Hemp has improved materially, the c.i.f. quotations for January-March shipments being well in advance of those ruling a year ago. Hemp is, in point of fact, at a remunerative level, and most of the mills can be operated to pay. An expansion in the output of this produce is, I believe, one of the certainties of the season.

Wheat and oats and other grain and pulse will again add materially to the volume of our exports; and, taking all the factors into consideration, I am of opinion that.when the produce year ends on September 30, 1910. the amount of our exports will establish a record in point of value.

The prospects before us are decidedly good, and this bank, with its ramifications and close connection with the producers, must necessarily benefit. I cannot, however, , refrain from repeating a warning note. Caution must continue to mark the policy of the trading community, and the land speculators throughout the Dominion must endeavour to moderate their views on values. ' New Zealand has greatly increased her obligations in recent years, and while she is well able to faithfully meet all >- engagements, there is no reason why the people should' be handicapped in their work by ridiculously high land values. Caution" should be the watchword of the people now and always. THE DIVIDEND. Mr. Martin Kennedy, while congratulating the chairman on bis address, took exception to (the policy in not declaring the usual bonus of 2£ per cent., the dividend being confined to 5 per cent. This, in his opinion, might cause shareholders to doubt the stability of the bank. So long as the bank was making profits which were equal ,to those of any other bank in the Dominion, why should it not pay dividends equal to those of the other banks in New Zealand? There was some reason for building up a strong reserve, but the reserve was already nearly 100 per. cent, of the capital, equal to any other bank in'the Dominion. It was not quite so large as that of some banks, but its responsibilities were larger. Then there were the claims of shareholders, that money written off should be restored to them.' He was disappointed at the non-payment of the usual bonus. He had not gone back on his previous opinions on this matter. People thought the State should have a larger slice in the bank than it had, continued Mr. Kennedy. Personally, lie would not mind these expressions of opinion if they came from irresponsible persons, but these opinions had been openly expressed in Parliament. It was liieh time shareholders entered a protest against any action of the kind indicated, and they ought to ask shareholders in London to combine with them in protesting. If the State had wanted it, it might have obtained double its present holding at the start. At that time the position was different. Shareholders now must resist to ! the last any attempt on the part of the State to take any more from the bank. If the State must take more, let it carry the case before the Arbitration Court, and pay the full earning power of the shares. Jn conclusion, Mr. , Kennedy asked for a reasonable dividend, such a dividend as the shareholders would approve. Why should the shareholders not have such a dividend as they thought proper, provided nothing was done to destroy the stability of the bank? Would any reasonable man say, with a reserve of £750,000, that payment of a 2£ per ceil*,, bonus would destroy the stability of the bank? He would therefore support the declaration of the dividend with regret that a 24 per cent, bonus had not been adopted.. The Chairman (Mr. H. Beauchamp) replied. As regarded the profits made during the first half of the present financial year, the six months ending September 30, 1909, they were large, but not so large as for the similar period last year. No difficulty was to be apprehended in making a substantial addition to the reserve fund at the end of the financial year, and in paying the same dividend and bonus as was paid last year. The bonus was rarely declared in any company for the first halfyear. He would support a larger bonus than 2£ per cent., but not until the reserve fund had reached one million ' sterling. Possibly, unless this was done, and the reserve built up rapidly, they might have to go to Parliament for authority to increase their capital. If they approached Parliament it would mean opening up the affairs of the bank. If they could go along steadily piling up the reserve fund from year to year, he was hopeful they would be able to pay off the £3,000,000 due in 1914, and also to extend their operations without increasing their capital, and thus have a large earning power on a' small amount of capital, If they were paying 15, 17, or even 20 per cent., their shares would compare very favourably with those of other banks. In proportion to its capital, the trade of the Bank of New Zealand was larger than that of any other bank in Australasia. Things were moving in an extremely satisfactory manner, and he was hopeful, with their great earning power, that during the next six months they would be able to make up for the very slight falling off in the profits during the first half of the financial year. There was no further discussion.

In connection with the usage of Biblekissing in Court, 6Oon to be reckoned among the curious customs of the pa*>t, there is a cherished tradition in the Magistrate's Court at Napier, which has the advantage of resting on better authority than most stories of its class. A good many years ago it was suggested that certain Witnesses would consider the oath more binding if there were a cross on the cover of the Bible, and an officer of the Court, determined , that the sacred emblem should be a fixture, hunted up the old brown leather volume and bound it up parcel-fashion with new red tape, completing his work by sealing the knot. Some time afterwards the Court dictionary was missing from the table, and failed to turn up. A few years passed, and the condition of the witness-box Bible became so deplorable that it had to be discarded for a new one. , When the red tape was ripped off, the battered book was opened and revealed to view the long-lost Johnson's dictionary I