DOMINION’S POSITION

Taranaki Daily News, 25 August 1931, Page 5

DOMINION’S POSITION

BANK CHAIRMAN’S VIEW DEMORALISED EXCHANGE. ' THUMBSCREW OF TAXATION. , London, July 16. Some interesting observations on conditions in Nev? Zealand were made by the Hon. W. Pember Reeves, chairman of the National Bank of New Zealand, in his address at the annual meeting on July 14. He said the directors’ reasons for reducing the dividend were all traceable to “the serious position” in New Zealand. ‘

, “To the effects of heavy falls in the price of almost every important article of export have been added' those of a disastrous earthquake, a demoralised rate of exchange, and the exaction of further taxation by an embarrassed Government," he said. “The resulting sharp contraction of trade has brought dowii imports and exports by many millions and depressed every branch of internal commerce. ' . . RESTRICTION OF ADVANCES' “These conditions have been reflected in our turnover, added to which the fates Of exchange-between New Zealand and London and New Zealand and Australia have complicated business and have been a source of much trouble and some anxiety. We are glad to say that we have been able to supply all our customers’ exchange requirements, and have no reason at present to suppose that vze shall not be able, to continue to do so. . Prudence in face of the plight of the country forced us to restrict advances; indeed, the marked shrinking in the free deposits of all the banks would alone have dictated this course. The widespread difficulties with which our clients, in common with other New Zealanders, are contending, have made concessions to many of them needful, and obliged us to [take precautions in the face of a very uncertain outlook. “You may. call this a pessimistic rofcital. It is not. It is a plain list of hard facts. You will admit, I think, that they justify a policy of more than (Ordinary caution." ‘ - TAXATION OF BANKS.<!t The financial troubles of the ( New Zealand Treasury led -the Government Jast year to make serious increases in •' taxation,” Mr. Reeves continued. “A very heavy hand was laid on the banks; their license fee was increased; their so-called income tax raised by 10 per cent.; and jthe profits of their note issue, of which jthe Treasury was already taking more than half, virtually confiscated. For [the present,, the banks continue to provide the currency and 'have done nothing in answer to the new tax except to reduce the number of ,10s notes and to inicrease their charge for keeping accounts. “Certain people have talked as though [the banks had contrived to pass their additional burdens on to the public. This is certainly not the case so far as we are concerned, By far the greater part pf the £22,000 additional tax paid by us this year in New Zealand is a net loss io us. When I tell you that the rates and taxes paid by us in New Zealand this year to £137,553, you will (Comprehend the thoroughgoing fashion In which authority at the antipodes is applying the thumbscrew." GOVERNMENT RETRENCHMENT. Mr. Reeves reviewed the latest banking statistics, remarking that the decline’ in free deposits and the increase in tixed deposi ts, some of . which have very high interest, explained the banks' hesitation to cut down the advances rate. ‘‘A Government that imposes almost penal taxation on banks and at the same - time keeps up the deposit rate by bor-: rowing huge sums internally at 5J percent.," ho said, “cannot fairly ask the banks in a year when their profits are heavily diminished to make further concessions to the public.” Referring to the Government's financial programme, Mr. Reeves said: “In nearly svery case the methods adopted by Mr. Forbes’ Government in the way of economy, retrenchment and taxation are faithful copies of those of the Ministries (which held office in New Zealand in the years of depression between 1879 and 11891. They include the transfer of the State railways from the Government department to a board of control, though the composition of the two bodies then and now is rather different. In each case ,the old chief manager has been carried bn. ... Remembering as I do the effects of retrenchment, taxation and wage reduction in New Zealand between 1879 and 1891, I think we . may hope that the result of the process now going on in New Zealand, will be to enable the Government to pay its way, and will also ibe of service to many manufacturers and [traders, though it will benefit the smaller and middle-class farmers very little. Its first effects may be to depress retail 'business, and it will not restore prosper-, ,ity; nothing but a rise in export prices gan do that.” Mr. Reeves, who has been chairman of [the National Bank since 1917, was a member of the New Zealand Parliament from 1887 to 1896 and Minister of Education, Labour and Justice in the last five years of that period. He resigned to go to London as Agent-General, and subsequently was High Commissioner from 1905 to 1908.