ENTERPRISE ARRESTED.

New Zealand Herald, Volume LXVI, Issue 20288, 22 June 1929, Page 17

ENTERPRISE ARRESTED.

CONDITIONS IN DOMINION.

BANK CHAIRMAN'S REVIEW.

NEW SETTLEMENT URGED.

DEVELOPMENT OF . IDLE LAND.

[iSY TELEGRAPH.—OWN CORRESPONDENT.] AYELLINGTON, Friday,' "Many reasons have been recently brought forward to account for tho present. easy monetary conditions. While there may be some truth in them, tho main explanation of tho matter lies in the fact, that, at the moment, there is little outlet for capital in now industrial enterprises," said Sir George Elliot, chairnan of the Bank of New Zealand, in his address at the annual meeting to-day. 'Most of tho trades and industries are overcrowded, competition being out of all p'opojlion to tho business offering; few are working to their full capacity, many, burdened by excessive expenses,' are just making both ends meet. Difficulty in finding investments has forced the price of local first-class stocks and shares up to a figure that shows but a small interest return, and has turned public attention to local body debentures and Government bonds that aro now offering —eloquent testimony to our export surpluses synchronising with tho halt in industrial expansion." , Sir George Elliot said that, although {lie export value of our primary products .is satisfactory, farming is not developing at the pace one would expect. Farmers state that, notwithstanding the number of persons unemployed, it is most difficult to obtain efficient, labour at anything like the wages they can afford to pay; development work accordingly is being retarded. Surplus of Capital Resources.

"Uiifler existing conditions our bank lias too great a capital and reserves for tho business offering," ho continued. "The legitimate demand for banking facilities, has not kept pace with the increasing 'capital and reserves of the institution and it is evident New Zealand St present is overbanked. "What is the remedy for such a state of affairs ? Would the imposition of a larger and more widespread customs tariff effect' a desired improvement ? There is Tier doubt such a course would for a short timo boom secondary industries, but the last state of these industries wou'l probably ho worse than the first, for" She cost of living would immediately increase, and tho great primary industry, on which the Dominion depends, would be seriously affected. For an increase in her population, for an improvement in her secondary . industries, and for the filling of offices and warehouses in her somewhat overbuilt cities, New Zealand must surely look to an increase of her exportable primary products. A Taxation Concession.

"The imposition of the graduated land •tax has limited the acquisition by individuals or companies of largo blocks of second-class unimproved areas. There are iu Now Zealand great blocks of uniihproved lands, areas that, under present conditions, no private individual or group of individuals can handle with any hope of financial success. "Government might take into . consideration the question of exempting from taxation for a period of years certain second-class unimproved • lands at present lying idle. The idea is no doubt upon to' criticism, but it is an idea that might well be tried in certain areas for the encouragement of settlement, so vital fi necessity to tho well-being and advancement of the Dominion. "Successful land settlement is the foundation on which New Zealand rests. Nothing' should be left undone by the Government that may in any direction fost'ir primary industry," Sir George Elliot added." "The Minister of Lands has a'i enormous field for the exhibition of ability and energy. The thousands of acres of unoccupied lands, breeding spots fur noxious weeds, call for attention tho uuestioii of herd testing—the quality of ihe marketable products —the scientific treatment of soils—the financial assistance tu struggling settlers of character who can offer only weak securities for advances—these are a few of the directions iu which ability and energy may be brought to bear," 7 Local Loan Advocated.

Other observations regarding the abundance of money were made by the chairman in earlier passages of his address. After commenting on the succession loan flotations in London last January, he remarked that, in view of the present outlook of the London money market, a somov hat higher rate may have to be paid on the conversion of the balance of £11,000,000 or £12,000,000 of the debt maturing in November, but there should be little difficulty in raising some millions of the amount in the Dominion at a cost approximating that in London. For the first time in history, New Zealand local bodies are finding it cheaper to raise their loans in the Dominion than rbroad. Recently a number of- 5£ per cent, issues have been placed on this market at par, with little or no flotation expenses. 'Hie supply of money available for loan on mortgage against good security is 1 greater than the demand. The iuiintr rate for such loans is 6 per cent, ■though occasionally a little less is accepted for particularly choice business. Plethora o! Funds'.

In reviewing the ' operations of the bank's long-term mortgage department, he said that although there had been a, steady demand for loans, the volume had / not, by any means, been at great- as was anticipated. Apart from £4.153,000 of short-dated British Treasury bills, the bank has investments in British, Australia®! and New Zealand Government securities and in debentures of New Zealand local bodies, of •which the book value at March 31 totalled £13.516,139, which figures are comfortably tinder market value. "These investments nmount to much beyond "what would constitute a strong liquid position," said Sir 'George, "but it has been found impossible to obtain in the Dominion anything like the volume of sound advance business that the hank has the means to deal with, con* sequent ly - e have been obliged to invest "this very large proportion of our funds in Government securities, mainly overseas, where it lias been placed in well-spread maturities, at a better rate of interest than could have, been obtained or* similar investments in New Zealand, and with the advantage of being more readily realisable. "'■Although our advances in New Zealand have decreased, there has been a Mtisiiictory increase at our overesas branches. * The good seasons experienced •hiring the last two years by primary producers in -the Dominion have enabled many of our customers here to work on less accommodation. The competition of various Governmental lending departments has also been a factor in reducing o;ir■'ordinary advance business. At present (lie demand for money is slack, and it would appear that for some time to come/we cannot look for any material increase in our advances in New Zealand.' JTo mentioned that the recent increase in the T.ondon bank rate benefited the bank 'Materially, owing to its large investments in short-dated securities in London. No Change in Interest Rates, Commenting on domestic money rates,. Sir George Elliot said: —"It is- of course, always a simple matter to reduce interest va(es/and so lessen deposits, but it was not so long ago that banks in New Zeav» land were compelled to raise rates in order to retain and augment their deposits and. notwithstanding the present excess, it would be inadvisable to make any alteration in the rotes now existing. The majority of people are lenders, not borrowers, and care must Vie taken that deposit are not reduced to a figure that would divert money in large quantities to other countries for investment, where, at the present time, a better rate on equally good security is obtainable; money can bo easily nnd inexpensively transferred from one Country to "another."