The Timaru Herald. SATURDAY, JUNE 21, 1930. THE BANKER’S BUDGET.

Timaru Herald, Volume CXXV, Issue 18599, 21 June 1930, Page 8

The Timaru Herald. SATURDAY, JUNE 21, 1930. THE BANKER’S BUDGET.

One of the outstanding features of the wide survey of the economic and financial situation confronting the Dominion, which was made by the chairman of the Board of Directors of the Bank of New Zealand, at the annual meeting yesterday, wag the substantial evidence that was presented of the strength and stability of the great institution over which he presides. Sir George Elliot declared that “no application for safe and legitimate accommodation had been refused, but in view of the unsatisfactory outlook it had been 'necessary to use the strictest discrimination in lending,” The chairman also stated that “a large amount of. the Bank’s resources are kept in liquid and readily realisable securities, consequently there is no need to curtail the accommodation we have been affording our customers.” Obviously, the country has been given a definite steadiness in its economic position by the traditionally cautious policy of the banks. That the year’s operations of the Bank have yielded a substantial return on invested capital is shown in the chairman’s statement, but the interesting aspect of the Bank’s operations is the handsome return being drawn by the Government, as its share in the dividends and the profits of the Bank; indeed, we fancy it wall come as a surprise to the average citizen to discover that the revenue derived by the Government from the BaSnk for last year amounted to £540,154, which indicates that the State is something of a substantial partner in the operations of the Bank. It is encouraging, therefore, in these uncertain days, for the country to be able to rest assured that the principal financial institution in the Dominion is so eminently sound, and that the policy of the Board of Directors, which does not, of course, appeal to the average thoughtless citizen, has been proved by experience to have created one of the sheet anchors in the darkest days. But the very comprehensive statement addressed to the annual meeting of the Bank yesterday, was not confined to matters of interest merely to bankers. On the contrary, Sir George Elliot traversed a very wide field in his review of the financial problems facing tlie Dominion. It may be said, at once, that the bankers’ outlook is essentially conservative in its •range. For many years the annual address of the chairman of the board of directors of the Bank of New Zealand has been regarded as second only in importance in financial circles to the national Budget, with the notable difference that the banking authorities invariably disregard pleasing platitudes and vague promises, but deal in hard and often unpleasant facts. Probably the main theme of the chairman’s address is the appeal Sir George Elliot made to the people of New Zealand to face financial and economic realities without fear, and indeed with confidence. Can it be said, with Sir George, that “it is a lamentable fact that as in Australia we in New Zealand are losing all sense of proportion where public expenditure is concerned; and even in private life what was considered extravagance a few years ago, is now taken as a matter of course”? This is an arresting charge. We are warned by the head of the Bank of New Zealand that “an increasingly expanding expenditure is getting out of step with the wealth of the country per head of population.” Moreover, it is boldly stated that “it does not require any prophet to foretell that unless expenditure, public and private, but especially the former, is substantially reduced, the future credit of the country must be prejudicially affected.” Happily, despite ■ the hurtful swing of the economic pendulum, we see no signs of the credit of the Dominion being damaged. On the contrary, Sir George Elliot points out in his reference to the Government’s borrowing operations, “that the last loan was obtained at a slightly better price for the Dominion than the previous loan and was heavily oversubscribed by the British public, the total number of applications being 24,850, and the amount applied for aggregating £19,577,800. “This is a clear indication,” the chairman of the Bank pointed out, “of New Zealand’s popularity in the Mother Country and everything possible should bp done to foster and extend that popularity.” The high standing that New Zealand holds in the opinion of financiers and the general investing public, is due, not so much to economic or political considerations, but to the character of our people. Sir George Elliot deqls in an interesting fashion with the position of the primary industry in relation to world affairs, and his conclusions are in tune with the considered opinion of everyone who has studied the general outlook. Very properly, however, Sir George stresses the vital importance of avoiding an adverse trade balance. It is pointed out, however, that New Zealand, for a period of seven years ended March 31, 1929, had an excess of exports over imports of £35,526,581, an excess which,

has materially assisted to preserve her financial equilibrium. In the same period, however, New Zealand has had to meet interest amounting to £45,000,000 on external loans, which meant, of course, borrowing in London to adjust the balance against the Dominion. Generally speaking, the keynote of the banker’s •budget is the absolute urgency of

“curtailing public extravagance, both State and municipal.” It is admitted that “it would be easy to close one’s eyes to the world conditions,” at the same time, as Sir George Elliot very properly pointed out in conclusion, “New Zealand has many advantages; fertility of soil, congenial climate, a healthy population of pure British stock, are all assets of incalculable value,” and it remains for the people to utilise these advantages to, the full, and face the future with quiet confidence, high courage and inflexible determination to surmount all difficulties in keeping step in the march of progress.