BANK OF NEW ZEALAND.

Otago Daily Times, Issue 19204, 21 June 1924, Page 14

BANK OF NEW ZEALAND.

ANNUAL MEETING. A STRONG POSITION. The annual meeting of proprietors of the Bank of Now Zealand was hold at Wellington yesterday. Mr William Watson, acting-chairman of directors, presided in the absence of the chairman (Sir George ElliotJ. ACTING-CHAIRMAN’S SPEECH. The Acting-chairman, in moving the adoption of the report and balance sheet, explained the various items in the statement of accounts. Ho pointed out that, after the year’s profits had been disposed of as recommended by the directors, the capital, reserve fund, and undivided profits would amount to £7,531,513 together with the 4 per cent, stock guaranteed bv the Government of New Zealand, amounting to £529,988, and due in 1934, which ranked for repayment subsequent to the liabilities of the bank to depositors and other creditors. These funds, aggregating i 1,801 ,bUI, were equal to over 20 per cent, of the bank’s liabilities to the public. But thov did not alone indicate the full strength of the bank’s position, for the directors had for many years been steadily accumulating internal reserves to provide for the effects of any exceptional set-back which might overtake UlO dominion. These largo internal reserves against unforeseen contingencies were essential to the maintenance of the credit of the bank and the country. During the year the note circulation of the bank had averaged about £3,920,000, whilst the bank’s legal right of issue was about £10,500,000. It had therefore, an ample margin of cviHoncy available to meet the ordinary requirements of its customers and to provide a substantial reserve for an emergency. The Now Zealand banks had always, even during periods’of considerable monetary pressure, been in a position to supply the currency requirements of the country with the greatest ease. It might be that some contrasting the present New Zealand circulation of approximately £6 000,000 with the issue before the war (about £1,700.000), might feel that the notes at present in circulation represented a measure of inflation. Prior to the war, however, the currency of the country consisted net only of the nolo issue but also of a large quantity of gold which was constantly passing from hand to hand. This coin probably amounted to something like two and ahalf millions, which, when gold ceased to bo issued, came into the coffers of the banks. The currency in circulation was, therefore, 'something over £4,000,000. As there had been an increase of population and trade during the past 10 years, as the cost of the necessaries of life had increased, and as other important changes had occurred, the increase of about 50 per cent, was hardly more than might have been expected. The directors had marked their appreciation of the work of the staff during the year by granting bonuses to all the members, with the exception of the junior unmarried men who received annual increases of pay according to a fixed scale. In a great many cases substantial increases of salary had been granted, and it could bo said that the pay of the staff, including the bonus, was on a liberal scale. In salaries, bonus, and the annual contribution to the Officers’ Pension Fund £466,844 was paid during the year, this being £30,864 greater than the figure two years ago, although the business of the bank had not increased in anything like the same proportion. Referring to business outside New Zealand, tiie acting-chairman mentioned that, while Fiji had latch' undergone a period of depression, the latest advices from the colony were of a more cheerful character than for some time past, and the bank’s business there continued to be satisfactory and reasonably profitable. The branch in Western Samoa had justified its establishment and had been of assistance to the business community and a convenience to the Government. Whilst in New Zealand the exchange question alone presented difficulty in connection with trading, Australia had for some time past experienced even higher exchange rates than the dominion and had also suffered from a shortage of currency. The note issue there was in the hands of the commonwealth, being conducted by the Note Issue Department -of the Commonwealth Bank under a special Board of Directors. The Note Board had recent> decided not to make any further issues of notes even in exchange for an equivalent of sovereigns. A restriction of production, commerce, and trade was the natural outcome. If Australia abolished the State issue and allowed the bonks to issue their own notes, making the circulation legal tender and a first charge on assets, with the special security of one-third of the amount of issue to be held in gold and two-thirds in Government securities, the financial stringency would be ended. No note-holder could reasonably question the safety of his holding if thus safeguarded; and by taxation of the circulation, the State could derive as large a profit as it dkl under the present system. The overseas trade of the dominion for the year showed, as far as exports are concerned, a satisfactory increase over the previous year, but the increase in the imports could hot, in view of the necessity for husbanding resdiirces, be regarded with satisfaction The large imports undoubtedly reduced the monetary wealth ol the dominion, but the heavy public expenditure, largely necessitated by the war, and for remunerative improvements, in so far as it was expended in the country did not, apart from the imports, diminish that wealth. Issues of loans by local bodies in New Zealand during the last 12 months had been on an unusually heavy' scale, the total ambunt approved by the Government being £6,096,493. Whilst in most instances the money raised was being used for the advantage of ratepayers, and often for works of a more or loss pressing nature, it was to bo regretted 'that such great expenditure was being incurred when the interest rates and the cost of the relative works were so excessively high. As New Zealand was an exporting country, the capital expenditure of the Government and local bodies should lie most carefully watched, for the burden of rates and taxes would oppressive if values of our products fell. Expenditure at the present rate could not be kept up for any long period, and when it eased off considerably the dominion might bo faced with the problem of unemployment. With but few exceptions, local bodies had to pay 6 per cent, for their loan requirements. The heavy cost of transferring proceeds of loans from London had militated against borrowing in that market, but a recent improvement in monetary conditions there has enabled several issues to be made at a net cost to the borrower of about 5? per cent, The issue locally of loans of local bodies had adversely affected the increase of fixed clopceits with tho banks, and, coupled with the competition of the Post Office Savings Bank and companies for deposits, the lending resources of the banks did not expand as it was desirable they should. OTHER SPEECHES. Mr W. Reece seconded the motion for the adoption of the report and balance sheet. With regard to land values, ho said, that was one of the most important things affecting this country at tho present time. He did not see how tho farmers could be prosperous until there was some readjustment. Surely the real value of land must bo its earning power throughout several years—good years and lean years—and ho thought that had been rather overlooked. Regarding exchanges, he thought probably in New Zealand the true perspective was lost sight of. We forgot we were merely a cog in tho financial wheel of the world, and therefore the banks in New Zealand would not do many of those things which they would like to do in the interests of tho people of this country. Take, for instance, as an example of the peculiarity of the exchange the enormous flow of gold into America. See how that possibly would affect for some yours to come tho position of other nations. It was fortunate indeed that Continental nations were recovering and many of them were returning again to prosperity, and if affairs with regard to Ge'-many were settled there was no doubt at all that it would have an immense effect, not only on this dominion, but also on other countries, and would help to stabilise the chief industries of this country. Mr Reece said he would like to congratulate the shareholders on being partners in an institution which hud practically passed unscathed through tho world war and through tho commercial crisis which followed. There was no doubt this and other banks in New Zealand were deserving of tho very greatest credit for the public spirit they had showed during those severe times of crisis. He would like to join in the welcome of the chairman to the new directors. He would also like to pay a tribute to the general manager and tho staff for the way in which they bad conducted the affairs of the bonk during the tryimr years. Only those who had been associated with them knew tho great strain they had been tinder. As far as the-general manager was concerned, ho worshipped at the shrine of the Bank of Now Zealand night and day. Mr B. W. Gibbs said they had listened attentively to the long and very interesting statement made by the acting chairman, and they had also listened to the remarks made by Mr Koece, one of the directors. Those gentlemen had provided them with what he mi«ht term a strong financial meal.

and anything ho might now say would be of a lighter nature—a little dessert, so to speak, to finish up with. He thought they would all agree tn~t the balance sheet was a very interesting • and a very satisfactory one. As chief auditor, nothing had ever given him greater pleasure than to affix his signature to the balance sheet before them. He wished those present to remember, however, that a balance sheet of that nature was not possible unless they had staff and brains behind it to nut the facts and figures before them in the form in which they had been presented. After ning through tho balance sheet from A to Z he could assure them that the true position was presented there. He might nerhaps he permitted to refer to the staff. Ho had known the general manager, Mr Buckleton, for many years. They had advanced in tho service together. They had had their differences of opinion at times, but such differences had not affected their friendship. The general manager had behind him the support of a good staff. Mr Reece had stated that the general manager worshipped at the shrine of the bank. From his knowledge of Mr Buckleton the speaker said ho might add that the general manager lived with the bank, he had its interests so much at heart. Mr Gibbs then thanked tho shareholders for having placed him in the proud position of being their representative on the Board of Directors. While he did not claim super-capacity above his follows or any superior business knowledge more than would naturally come in ■ the course of years, still he did claim after nearly hdf a century of banking and business that he did know something about it. In view of his experience he claimed to have some knowledge of the duties and requirements of a bank director. They had passed through strenuous times, and he hoped in future that if any crisis arose they would be able to meet it and deal with it as they had done in tho past. With devotion to business and work* he vyas sure they would solve all their difficulties. Mr Gibbs said as they all knew he was elected only for tho balance of the term of office of the late Mr Kano, and he would ih'ueforo submit himself for election again at the end of tho year. The report and balance sheet were adopted unanimously. Mr T. Slmilcr Weston said the meeting should not be allowed to disperse wiTmut expressing its thanks to the directors and the general manager and staff of the hank for the very good bal-nce sheet presented. \s Mr Gibbs and Mr Reece bad remarked it was a most satisfactory balance sheet. It must be a matter of sincere satisfaction to realise that the Bank of New Zealand had pulled through during the Inst five years. Banks in - 'arr'cln had gone down, and there had been a heavy nrv'nn' of water shumed bv w*;- ■ f '

can institutions. Because tho Bank of New Zealand had done i ,

a disposition to take tho view tha: u ..aa only natural it should do so, but that was really due to the general manager and his staff.

Mi John Mill fDunodin). in seconding the vote of thanks remarked that he for one knew tho interests of the shareholders were carefully safeguarded by tho present I’.o-rcl of Directors and the general manager and his staff. Tho bank bad been a great support to many a str ggler. ft had itself been helped by the Government, but now it was in a thoroughly sound position. which was a matter for tho greatest satisfaction

The vote of thanks was carried by acclamation.

The acting-chairman, in responding, said it seemed the fashion nowadays to regard banking as an easy enterprise, but the majority of tho shareholders ho know held very different views. , Mr Buckleton endorsed what Mr Watson '--cl said Banking work was not easy. There was an immense volume of work to be done, and he was pleased to say it had been well done by the very capable staff a! the bank. For himself he had to confess ho was, as Mr Gibbs bad put it. a man of one idea-- tho Bank of New Zealand.

On the motion of Mr George Shirtcliffe, seconded by Mr T. Shoiler Weston, it resolved to forward to Mr J. H. Upton, on behalf of the shareholders, an appreciation of his past services as a director, and wishing him goodwill and_ the enjoyment of many years in his retirement from active work.

The acting-chairman said tho. directors would have very great pleasure in forwarding the resolution to Mr Upton.