CHAIRMAN’S REVIEW

New Zealand Times, Volume XXXVI, Issue 8295, 5 December 1912, Page 2

CHAIRMAN’S REVIEW

A SCARCITY OF MONEY. The customary half-yearly review or the position ana prospects was made by the chairman of directors, wno said: Tins being the "half-year general meeting” oi Proprietors, there is no statement of accounts to submit to you. rho only actual business to be transacted is the election of a shareholders representative on tae Board, and the declaration of an interim Dividend. With regard to the former, I have to state that the retiring Director, Mr Vv'xn. Watson, has again offered his services, and tnere being no other candidate, I have much pleasure in declaring Mr Watson duly elected. Ho has now occupied a seat on the Board for some eighteen consecutive years. Thougii no accounts arc submitted, 1 am glad to bo able to inform you that the profits for the half-year ended 30t)i September last compare favourably with those for the corresponding period of any previous year. The interim dividend has therefore been earned, and, as wo judge from present indications that the results of the current half-year’s working are likely to prove equally satisfactory, we have no hesitation in declaring the usual interim dividend. A dividend at the rate of fa per cent, is declared accordingly, and will be payable in Wellington to-mor-row, sth inst., and at Branches on receipt of advice. 1 Mr J. B. Reid, who - was absent from the Dominion on the occasion of our last meeting, returned in October, and we were pleased to welcome him back to his seat on the board. _ We regret, however, that he is not with us to-day, he having quite recently resigned his position as a director. I have Mr Reid’s authority to say that, in resigning from the directorate, he was prompted by a desire to open the way for the appointment in his stead of a director able to devote more time to the duties of the position than he finds it possible to give, it affords me pleasure to say that Mr Reid has always taken a keen interest in the affairs of the Bank, and his retirement is a matter of very great regret to his colleagues on the board. He, however, urged the course he has followed as being the best in the interests of the Bank, and the Cxovernment have met his wishes and accepted his resignation, appointing in his stead our old colleague and former chairman, Mr Harold Beauchamp, whom we have much pleasure in welcoming among us again to-day. , the hardening tendency of the money market, which i commented upon when I addressed you in June last, has since been accentuated both in the Colonies and London, and, in view of the conditions generally, it has been deemed prudent to continue the pursuit of tne somewhat conservative policy adopted early in the year. At the same time, wo have met the legitimate requirements of our customers, and have given the necessary support to the industries and trade of the Dominion. While there have, of course, been cases in which we have, deemed it advisable to refuse accommodation applied for, we think that, on the whole, our customers recognise that wo have responded pvell to their applications. The existing state of the local money market brings homo to us, very forcibly. the facility with which financial conditions change in these Colonies. It is but some eighteen months ago that ray predecessor, addressing you from this chair (in June, 1911), remarked upon the abundance of money available, and the restricted scope for its employment. At the present time wo are experiencing an exactly opposite state of affairs. The scope for employment of money is at the present time wide, but tbe money is scarce, and the demand for accommodation, though in most cases quite legitimate, is greater than the Banks feel themselves justified in satisfying. I see nothing in the immediate outlook to warrant an expectation of an early return to easier conditions ; indeed, there are not wanting indications that an even greater degree of stringency may lie ahead. Under the circumstances, the Board have of late been considering whether the time has not arrived to propose a substantial increase in the Bank’s capital. The existing capitalisation of the Bank was fixed by Statute in 1903, and we are legally advised that, without legislation. nothing of a definite character can be done by Shareholders in the direction of increase. We therefore think it will probably bo desirable that steps should bo taken, in the next session Of Parliament, to obtain authority for the Shareholders to increase the capital from time to time, as they may deem expedient, by resolution in general meeting in terms of the Bank’s Deed of Settlement. There can be no doubt that, at the present time, an accession of capital would he of great benefit to the commercial and industrial interests of the Dominion, as it would put the Bank in the position of being able to afford financial- assistance in many quarters where at present it has to be refused. It would also undoubtedly be in your own interests, as it would enable us to extend our connections and cement valuable and profitable relationships. _ Legislation will be necessary next year if the £1.000,000 4 per cent. Guaranteed Stock, which matures on the 19th- July, 1914. is to he renewed under the guarantee of the New Zealand Government. We therefore propose, with-your approval, to make application to the Government, requesting them to introd’mo. into next session of Parliament, a Bill conferring upon Shareholders power to increase the Rash’s capital. _ Notwithstanding the stringent financial conditions. the state of the Dominion’s trade and industries aprvoars to he prosperous. The season hids fair to he an abundant one, and the tiroes nf nnr ecnecinlly wool—are highly satisfactory. There is every indication that the prospects for wool are exceedingly hn>ht for the coming season. The improvement that has recently taken place in the hemp market will, if maintained, no doubt result in renewed nctivitv in the flax indnstrv. The recently published Trade Statistics for the year ended 30th September

last, show a gratifying expansion in the volume of our exports for the year, the figures being:— Exports for the year ended—30th Sept., 1911 ... £19,912,656 30th Sept., 1912 ... 20,714,595 Increase ... £ 801,939 This movement bids fair to continue during the current year in an increasing ratio, the figures of our principal exports for the month of October, compared with the corresponding month of last year, showing a very encouraging growth, namely: — October, 1911 ... ... £614,007 October, 1912! ... ... 953,202 Increase ... ... £339,195 On the other hand however, the imports for the year nave shown a more than corresponding increase, the figures being as follows: — Imports for t*he year ended—30th Sept., 1911 ... £18,611,960 30th Sept., 1912 ... 19,615,291 Increase ... ( £1,003,331 For many years to come. New Zealand will be in a state of development, and consequently dependent to a largo extent upon cheap loan money. In ordinary times, the savings of the people, and the borrowings of the Government and of Local Bodies from abroad, enable this demand to be met; but, owing to the general unrest in Europe, to labour strikes and war clouds, with lately the actual outbreak of hostilities in the Balkan Peninsula, our principal source of supply—London—has been practically closed to us for some months past, and it will probably be some time yet before the loan propositions of any of our- Local Bodies will meet with a favourable reception in the London market. The States of the Commonwealth of Australia are in _ the same position as ourselves in this respect. So long as. this condition continues, it behoves all Local Bodies and other borrowers, having projects of expenditure on hand, to make their financial arrangements beforehand. It is no douht known to many of you that I purpose paying a visit to the Old Country, leaving Wellington this month. I expect to return to New Zealand in seven or eight months. During my stay in London I will have the opportunity of further familiarising myself with the Bank’s business there. I will be able to confqr with the Shareholders there on the matters above referred to, and I hope to come back, furnished with fuller knowledge than I at present possess, to assist the Board in its deliberations on the important questions affecting the interests of the Bank and those of the Shareholders, which, as I have already indicated, may fall to be dealt with next year. ■ , . . , Mr Kennedy added that in view or the probability, indeed, almost the certainty of banking legislation next session, he would of course consider it his duty to he back in time for it.- As there were only two shareholders’ representatives on the directorate, _ of whom he was one, it would _b© unfair to his colleague to leave him alone on that occasion. In view of the number of years that he himself bad had the honor of being a representative of the shareholders, he would consider he was failing in his duty if he were not here on an important occasion of the sort.