The Taranaki Herald. DAILY EVENING. FRIDAY, JUNE 18, 1915. BANK OF NEW ZEALAND.

Taranaki Herald, Volume LXIII, Issue 144709, 18 June 1915, Page 2

The Taranaki Herald. DAILY EVENING. FRIDAY, JUNE 18, 1915. BANK OF NEW ZEALAND.

The annual reports of the directors of the Bank of Now Zealand are always interesting’, but that presented by Mr. Harold Beauchamp to-day is particularly so, as much for the views expressed on the general financial and commercial outlook throughout the world as for its references to the bank’s own affairs. The latter arc of importance to everyone in the Dominion because of the substantial interest the Slate, holds in the hank. It is therefore highly satisfactory to find that the financial position is exceptionally strong. The reserve fund now amounts to two millions sterling; the investments have been caretally written down to the actual Stock Exchange quotations at the end of the financial year; and the coin and cash balances at the end of the year amounted to £4,827,522, or nearly a million and a half

vious year. The note circulation was nearly a million greater, necessitating, of course, a corresponding increase in tiro gold reserve, but the directors have gone further than this in their policy of strengthening the position of the hank during the financial crisis brought about by the war, with the result that they are able now to meet any emergency that is likely to arise without difficulty. In a banking institution soundness and security are the first things looked for, but while giving these in an ample degree the directors have succeeded in making handsome profits as well, these amounting to some £II,OOO more than in the previous year. The balance sheet, however, will he found elsewhere, and it is not necessary for us to go into details here; the results speak for themselves. In the course of the report -Mr. Beauchamp refers to the steps taken hy the Imperial Government at the outbreak of the war to conserve British financial resources, with the result that the vast stream of credit constantly flowing to London from Britain's world-wide investments has accumulated there as a financial reservoir, the outlet of which is controlled hy the Imperial Government. This was one of the statesmanlike actions that have brought about a remarkable change in the feeling of British capitalists towards Mr. Lloyd George, for it assured to the country plentiful supplies of money for the prosecution of the war and enabled it also to lend financial aid to its allies. With respect to the measures found necessary in this Dominion to secure financial stability during the war, Mr. Beauchamp refers particularly to the Mortgages Extension Act, which has proved of great service in preventing hardship to mortgagors. But lie points out that in some mortgagors have perverted the intention of the Act by utilising the money which should have gone to the repayment of mortgages for lending on mortgage themselves at higher rates of interest. He thinks the mortgagees in such cases may he overreaching themselves and that' those who are bona fide claiming the protection of the Act may not he wise in doing so. His reasons for the latter belief are worth repeating. There is no reason, he says, to anticipate a substantial drop in money-values

after tlio conclusion of the war. The prevailing conditions in the great . monetary centres of the world are hound to he reflected, sooner or later, in the local market, and as he sees no indications of easing prospects in tho centres, he is forced to the opinion that values are likely to remain comparatively high. There is no present shortage of money, hut when the future is more assured the supplies of floating capital will prohahly be quickly absorbed and money may become scarce. There may he further appreciation, and ho is therefore of, opinion that those who are re-arranging their mortgage liabilities, as they ma J lure, on the best terms possible are acting with a measure of proscience which future events will fully justify. In other words, his point seems to he that a mortgagor who takes advantage of the Act to-day to save himself, say, the one per cent, extra he might he called upon to pay for a renewal may find when tho Act censes to operate that he will lie compelled to pay an even higher rate, since money may be more scarce than at present. It, is a point .which mortgagors will do well to consider, for there is every prospect that when the war is over there will be an unprecedented demand for money, for a few years at any rate. Hr. Beauchamp also warns local bodies who may have schemes of expenditure in prospect that it is extremely unlikely that the London market, oven after the termination of hostilities, will become favourable for the issue of loans for some lime, and it will be necessary for borrowing bodies to re-adjust their ideas as to rates. With regard to the financial ease now existing in New Zealand, ho says it is ease which, like the calm before the storm, may presage strain and stress later on. There is, however, one factor for which possibh r he docs not, allow .sufficiently. The Dominion is now reducing its capital liability to London by an abnormally great excess of exports over imports, and there is really no reason why it, should not continue this process until the prices of our chief products fall very considerably, which is improbable in the near future. Hence our financial position is daily becoming stronger. At the same time it is as well to he cautious and he prepared for whatever may happen. Regarding the general outlook Mr. Beauchamp has few misgivings. There are other matters he touched upon to which we must defer reference until another day. For the present it is sufficient to say that his remarks are well worthy of close attention.