BANKING AND TRADE

Wanganui Chronicle, Volume 79, Issue 200, 27 August 1935, Page 5

BANKING AND TRADE

TREND IN NEW ZEALAND » REVIEW OF CHAIRMAN OF NATIONAL BANK AN IMPROVED OUTLOOK fc The general banking position in New Zealand was referred to by Sir Austin Harris, chairman of the National Bank nf New Zealand, at the annual meeting in London. Sir Austin said:— With regard to the general banking position in the Dominion will here only refer briefly to the average deposits and advances of the trading banks for the March quarter, which are the best indication. Deposits (incuding Government) were unchanged at £61,10® 00, while advances at £43,077,00, as compared with £41.5/4.01in, show an increase of £1.503.000. With regard to eposits, however, it should be noted that th» interest-bearing deposits showed a comparative increase of £2,300,000, while free deposits showed an increase of a similar amount. Last year 1 stated that owing to the heavy surplus of banking resources and the impossibility of finding a profitable outlet for them, the deposit vates had been reduced shortly before our annual meeting, and in November last a further reduction of f per cent, all round was made, so that the rates are now—Three months, If per cent.; six months, Ij per cent.: 12 months, 2f per cent.; 24 months, 2j p°»- cent. The minimum advance rate was reduced by J per cent, to 4i per cent, on December 1 last Reserve Bank. The Reserve Bank of New Zealand has nearly completed its first year, and I think 1 may say that the change has been effected with the minimum of disturbance to all concerned, and that we, in common with the other banks, have given our hearty co-operation with a view to fascilitating the new development. The Governor, at the first annual meeting of the Reserve Bank, held recently in Wellington, indicated that the bank would pursue a steady course and would not embark on any rash experiments which would have a prejudicial and unsettling effect upon the credit of the Dominion. He also made it clear that in the absence of anv change in conditions, of which he saw no indication, the bank would aim at maintaining the rates of exchange at their proper level. Trade. 1 he more settled feeling with regard to exchange is reflected in the balance of trade figures at March 31 last. Exports were valued at £36,985.000, as against £36,834,000 last vear. a decrease of £849,000. Imports were valued at £26,082,000, as against £20,906.000 last year, an increase of £5.174,000. The exces s of exports this year is £9,903,000, as against last year’s excess of £15.926,000. Importers, relieved ( from exchange anxiety, were evidently encouraged to buy, and latest figures show that this tendency is persisting. J he heaviest increase was shown in motor-vehicles, the value of last vear’s imports being £705.000 while this year they reached £1,909,000. As a matter of interest the number of vehicles licensed at March year was °O9 - 462, as against 197,285 a year ago."

Export Prices. Exports were disappointing towards the end of the year, especially as regards wool and butter prices. The average price per bale received for wool was £l2 12s 9d, as against £l4 5s | lid last year, and the quantity shipped • was 621.070 bales as compared with 81 1.7 J 9 The average price received for but ter was 8.7 d a lb. as compared with 9.1 d a year ago, and the quantity was about 2000 ton s less. The quantity of cheese exported was slightly less, but the value was maintained at 5.1 d a lb. t am glad to say that prices for wool, and, to a lesser extent, butter, have since improved, and this is an encouraging factor. With regard to meat, lamb, mutton, and beef showed an improvement in both quality and value, the average price of lamb advancing from 5.5(1. to 6.7 d. a lb. and that of mutton from 3d to 3.9 d a lb. There is, of course, a certain amount of anxiety in this market as to the final outcome of the discussions now taking place in Lon don. and it is to be hoped that some satisfactory agreement will be reached. You may remember that last year 1 referred to the interesting and successful experimental shipments of chilled beef from the Dominion to this country, indicating that chilled beef can be carried as well from New Zealand as from the Argentine. 1 went on to say that this should open up further possibilities of trade in this direction, and. now that the Dominions —I include Australia—have demonstrated that, chilled beef can be sent over in good condition, it seems only reasonable to hope that they may receive a greater proportion of the total beef imports to this country, of which at present 75 per cent, are foreign and only 25 per cent, from the British Empire. Government Fnance. The Minister of Finance was able at March 31 last to show a Budget surplus of £1,626,990, as opposed to the deficit of £709,999 last year. This is a very satisfactory result, in spile of the fact that some of this surplus has been obtained from the profitable realisation of part of the gold taken fi\ .u the banks. That New Zealand credit stands very high in London is shown by the success of the issue of £8,000,090 3 per cent, stock, which will be used to repay the 5 per cent, stock maturing in October next. Jt is pleasing to see that the New Zealand Government hasbeen able to borrow' here on terms almost as good as those obtained by our Government. The only other loan operation here during the year was the conversion of the £3,989,909 4 per cent, loan, 1933-43 into 34 per cent, stuck maturing 1955-69. Legislation. The most important legislation passed during the year is that dealing with mortgages by which the Government are attempting to relieve the financial troubles of the farmer, with the result that the Mortgage Corporation of New Zealand Act and the Kural Mortgagors Final Adjustment Act have pased into law'. As you know these measures aroused considerable controversy, but it is impossible as yet to gauge their effect or efficiency. Nevertheles, any step to place the farmers’ finance on a sounder footing should be welcomed.

The £500,000 capital of the Mortgage Corporation of New Zealand recently offered in the Dominion was over-subscribed three and a-half times. , 1 am glad to say that the figures of unemployment show a steady ’mprove went. In March 1934, the number of men wholly or partly a charge on the Unemployment Board was 62,114; this year the corresponding figure was 50,345. The revenue of the board for the year Io March, 1935, was £4,623,000, and the expenditure £3,913,000. The General Outlook. The past year has again been a very difficult one for bankers, and we have been hard put to it to find profitable employment for our funds. 'I he signs of returning confidence, to which I referred at our last meeting, became more apparent during the year, ami 1 am pleased to be able to tell you that trade conditions within the Dominion evince a somew'hat more healthy tone, so that we are encouraged to hope that we have seen the worst. However, conditions are still far from normal, and we are not yet out of the wood. Any further substantial improvement would seem to be largely dependent on a corresponding improvement in over sea prices lor New Zealand's primary produce. As 1 have already pointed out, wool prices show an encouraging upward tendency, but prices for dairy produce, although somewhat better, leave plenty of scope for frther appreciation. The meat problem has yet to be solved. It is not for me to deal with world problems of stabilisation, tariff, and exchange, which are still as acute as ever, ft must, however, be a source of great satisfaction to all of us that Great Britain seems to be emerging , from her troubles more rapidly than other countries, and any benefits accru- . ing should in due course be reflected in our IDominion trade. A balance Budget, with the possi- ' bility of the continuance for some time of satisfactory revenue conditions, encourages us to hopd for some relief in the direction of the present burdensome taxation. Our own efforts, as in the past will be directed towards giving all the assistance and encouragement we can to our customers, and as conditions tend to improve we shall hope to see a greater demand for accommodation. The bank is in a strong and healthy condition, and we shall be in a position to take full advantage of any further improvement which may manifest itself, and which I venture to hope is not far distant. (