BANK OF NEW SOUTH WALES

New Zealand Times, Volume LI, Issue 12015, 18 December 1924, Page 10

BANK OF NEW SOUTH WALES

CHAIRMAN'S REVIEW SOME INTERESTING COMPARISONS. At tho ordinary general meeting of the Bank of New South Wales, held at the head office, Sydney, on Friday, November 2Sth, 1924, the chairman, Mr Thomas Buckland, president of the bank, in moving tho adoption of the report, mentioned some figures in comparison with twelve months ago. “Note circulation in New Zealand has decreased £150,000, and is now lower than it has been for years past/ be said. “Deposits are £731,000 lower than at this time last year, but the disappearance of tho cross entry of £921.700 for war gratuities more than accounts for the difference. “Bills payable group shows a decrease of £1,132,000, oaused by a reduction of some £730,000 _in London commitments. The remaining balance of £-100,000 is well distributed among the other items of the group, and is quite normal. Reserve fund has increased £250,000. ON THE ASSETS SIDE. “Coin, notes and cash balances at bankers show a reduction of £1,648,000; London items and other banks an increase of £462,000, and securities a decrease of £970,000 —in all £2,156,000. Of this £1,261,000 appears in, increased advances, and the balance is reflected in the decrease in bills payable just mentioned. Premises account has been increased by £30,000. During the year wo have added largely to the value of our promises. “Advances show an, increase of some £1,261,000 as compared with this period last year. Abnormal demands, in addition to the usual seasonal requirements, have been made upon us for financing both our country and city clients, hut the swing of the pendulum should ho now tho other way, and we fed justified in anticipating that an appreciable amount from the large sums coming in just now from exports will be reflected in a reduction of our advances and increase in deposits- . HIGH WOOL PRICES. “Very' high prices still obtaining for wool and the bountiful harvest anticipated and being realised for sugar, butter, wheat and other products, coupled with the borrowing policy of the Governments, have made the financing of our exports most strenuous and difficult, and the only practical way of meeting and, we trust, overcoming the difficulty was the formation of a kind of pool amongst all the trading banks of -Australia, including the Commonwealth Bamk, to deal with the two principal items, viz., wool and wheat, each talcing its quota,, gauged somewhat upon the lines of the volume of this class of business individual banks were in the habit of doing in the past. Certain note facilities, as agreed upon, are to be made available to each bank in harmony with its negotiations of produce bills, should such facilities he required. As I said before, this seemed the only course to pursue under the circumstances; it promises to work out satisfcatorily for the time being, b it the position of the banks at the end of the export season remains to be seen. I doubt if it is within the power of anyone to accurately forecast it; anyway, this method of meeting the difficulty bv the assistance of temporary additional note facilities, although useful for the time being, is not a remedy for the inelasticity of the currency. , The trouble ie likely to recur each year, and as population and production increase, so will the difficulty. Had the banks the right of -asue there would have been more elasticity in credit far production and for commerce and no currency worries, and I desire again to strongly urge the Commonwealth) Government in the interest of the community to reconsider the question of giving back to the banks their old-time right to issue notes adequately safeguarded, and on a fair interest basis. THE CURRENCY LAW. “In. New Zealand the law con trilling currency entitles us to issue up to the tctol of our coin and Government securities there. The right of this bank ia roughly £2,000,000, whereas our ac fcoal issue at present is only £415,000, and bears practically tho same ratio to our deposits as it did in 1917, although between them and now it varied from 9 to 16 per cent. Taking all the banks in New Zealand the following ratios ' are of interest: — “Notes to deposits in 1917 —12 per cent.; now 13 per cent. “Nates to coin in 1917—64 per cent.; now 82 per cent. “Notes to total assets in 1917—11.7 per cent.; now 10.6 per cent. “The total bank note circulation in New Zealand is £6.400,000, with a limit of over £13,000,000, and the fact that the banks have not abused the trust placed in them is surely a reply to those here who loudly assert that if the banks had the' right to issue, grave inflation would, or might, result, and that a Government managed issue of notes affords the 'better protection to the community. “While on this question of currency, I should, like to refer .■ to the question of allowing our gold to continue to leave the country as at present. Can we afford to allow, say, £2,500,000 to £3,000,000 worth of goLd produced to be exported annually, in the face of the present world outlook? “To give notes for the yold held bv the_ banks would only change the gold from the bonys to the notes board, and only a small part of the notes given therefore could be circulated. 1 but for the Note Board to buy the gold produced would add annually to the note currency, and thus to the convenience and advancement of commerce and the country generally. It would add annually to the board’s store of gold, and increase its ratio oi gold to liabilities. In no other way can the stoop of gold in Australia be economically increased, and the issue of notes against gold gives a legitimate increase to the circulation. LONDON AND FOREIGN BUSINESS. “So that you may have some idea of the magnitude of our London and foreign business. I may mention that our transactions for the twelve months ended September 30th last, to and oi? l „~k ,n<Jon ’ wero approximately £05.000,000 sterling, but tho margin of profit thereon was unusually small, owing to the high premiums wo have had to pay for transferring -oUr funds back from London. “I cannot conclude this speech without offering our united best wishes to the newly appointed members of the Commonwealth Bank Board. The establishment of this board, with its con- " - note issue, is an event in the history of Australia, and its possibilities are very great for good, or the reverse. • V*l n^ er bank’s new act it is provioed that the general meetings of the bank will be held annually, or. if the board ho decide, half-yearly The custom of holding yearly meetings has been adapted by most of the great bank*? of the -world, and we have decided’ to do likewise; therefor© the ordinary general meeting of this bank mil henceforth be held annually instead of half-yearly.’* 9