BANK OF N.Z.

Wanganui Chronicle, Volume 79, Issue 139, 13 June 1936, Page 7

BANK OF N.Z.

ANNUAL MEETING RECENT LEGISLATION WHAT EFFECT WILL BE REDUCED EARNING POWER WELLINGTON, June 12. Sir George Elliot, chairman of directors, presided at the annual meeting of the proprietors of the Bank of New Zealand to-day. There was a large attendance. Other directors present were Messrs. William Watson, R. W. Gibbs, and A. T. Donnelly, also the General Manager, Mr. F. W. I'awson, and the chief auditor, Mr. A. L. Hempton. In moving the adoption of the report and balance-sheet the chairman remarked that during the year under review, the total amount of Bank of New Zealand notes presented for payment was £179,326, the amount of unpresented notes at March 31 being £324,452. Deposits, £35,740,430, were higher by £2,541,817 than a year ago, the greater part of this increase being in current accounts. Coin, Reserve Bank notes, and deposits with bankers stood at £6,913,141. Money at call and short notice, Government securities and other securities in London, £8,172,420, showed an increase of £586,952. Bills receivable in London and in transit showed an increase of £799,333, mainly accounted for by larger shipments of wool and higher prices ruling. New Zealand Government securities, £3,397,05S, showed an increase of £249,386, but Australian Government securities were less by £264,326. Advances and bills discounted, £22,179,373, were more by £688,642 than a year ago. New Laws and the Banks Sir George Elliot next referred to recent legislation, including the Reserve Bank of New Zealand Amendment Act and the Primary Products -Marketing Act. He said: At the General Elections in November last, the Coalition Government was overwhelmingly defeated, a large majority of the constituencies returning Labour members; aud for the first time in the history of New Zealand, a Labour Government is in office. : The Government has already taken steps to implement by legislation its election platform, and the “Reserve I Bank of New Zealand Amendment i A« t” has been passed giving to that ; institution (now made a State Bank) I lull control over the credit and cur- ; rency of New Zealand. ! A “Primary Products Marketing I Act” has also been passed, giving the Government control over the Dominion’s exports, though its guaranteed proves and marketing proposals are to be applied at present only to dairy produce. Some of the legislation directly affects the trading banks. For instance, they are to lose from August 1 next the" handling of the exports of dairy produce, and should wool and meat come under the Government’s guaranteed price aud marketing scheme, the effect would be that the banks would be entirely deprived of the normal means of replenishment of their London funds and would have to purchase all their exchange requirements from the Reserve Bank of New Zealand. 1 need hardly say that the Government’s proposals Li this direction will seriously affect an important branch of the trading banks’ busineess, a business they have developed and carried on since the earliest days of banking in New Zealand. Reserve Bank of New Zealand. Recent legislation has made important amendments to the “Reserve Bank of New Zealand Act.” The private shareholdings iu the bank have been purchased by the Government at the approximate price ruling at the date of the recent elections. The present directors will continue to retain office during the pleasure of the Governor-General in Council. Bower is given to the bank to regulate and control credit and currency in New Zealand, the transfer of moneys to or from New Zealand, and the disposal of moneys that are derived from the sale of any New Zealand products. 7 The bank is authorised to grant accommodation by way of overdraft for the purpose of financing the purchase and marketing of any New Zealand produce. The accommodation that the bank may grant to the Treasury has been increased from one-half of the revenue, or estimated revenue for the year, to the full amount of the revenue for the year. The limitation of the amount of New Zealand Government securities, or securities of the Government or the United Kingdom, with an unexpired currency of more than three months, which the Reserve Bank previously was authorised to hold, has been removed. The Reserve Bank has been empowered also to underwrite New Zealand loaus. The Act as amended gives the Minister of Finance power to suspend, either absolutely or conditionally as he thinks fit, the duty of the Reserve Bank to give sterling in exchange for its notes. Under the original Act, Trading Banks were required to maintain balances with the Reserve Bank amounting to not less than 7 per cent, of their demand liabilities and 3 per cent, of their time liabilities. The Act as amended gives power to the Governor of the Bank, acting with the authority of the Minister of Finance, to vary these percentages but so that the balances required to be maintained shall not at any time be less than those now existing. It will be seen that the Government has taken very full powers indeed to regulate and control credit and currency in Now Zealand. Primary products Marketing Act. This is an Act the purpose of which 1-:—“To make better provision for the marketing of dairy produce and other primary products so as to ensure for producers an adequate remuneration for the services rendered by them to the community.” The preamble states that it is considered essential in the public interest that producers of primary products should, as far as possible, be protected from the effect of fluctuations in the market prices thereof, aud it is thought that the most effective and appropriate way of affording such protection, so

far as relates to primary products intended for export, is to provide that the Government shall acquire the ownership of such products at prices to be fixed and promulgated from time to time. A Department of State, called the Primary Products Marketing Department, under control of the Minister of Marketing, is to bo established to administer the Act. The principal functions of the department are to make all necessary arrangements with respect to:— (a) The acquisition by the Crown of any primary products in accordance with this Act or in accordance with any other lawful authority that may hereafter be conferred. (b) The marketing, in New Zealand or overseas, of primary products, whether or not such products have been acquired on behalf of the Crown. The Act provides that no contract for the carriage by sea of any primary products intended for export shall be made save by the Minister or in conformity with conditions approved by the Minister. Dairy produce will be the first of New Zealand’s primary products to be marketed under the new Act. After August 1 next all dairy produce intended for shipment will, as soon as placed on board any ship for export, become the property of the Crown which will make payment therefore at prices fixed from time to time by Order in Council. To enable these payments to be made, an overdraft will be granted by the Reserve Bank on an account to be styled “The Dairy Industry Account.” Proceeds of the produce, as it is sold, will be credited to this account, and if the amount realised is less than the guaranteed prices paid to the producers, the loss will be borne by the Government. The Act provides that for produce exported on or before July 31, 1937, the price shall be fixed after taking into consideration the prices received in New Zealand during a period of from eight to ten years prior to July 31, 1935. After July 31, 1937, several other factors are to be taken into consideration in fixing prices. Provision is made in the Act that the Minister may control the marketing and fix prices of dairy produce intended for consumption within New Zealand. This is a brief outline of some of the main provisions of the “Primary Products- Marketing Act.” The Hon. W. Nash, Minister of Fin ance, who is also Minister of Market ing, is hopeful of securing a market foi all New Zealand’s surplus dairy produce by reciprocal agreements with Britain and other countries. He is shortly to proceed to London with this object in view, and his efforts t( expand New Zealand’s markets wif -most certainly have the sympathetic support and goodwill of the public. One effe t of the measure will be that, as from August 1 next, the financing of all dairy produce exported fron New Zealand will be undertaken by the Reserve Bank of New Zealand or behalf of the New Zealand Govern ment instead of by the trading bans or account of the dairy companies as ir the past. The trading banks have played ar important part in financing am: developing the dairy industry from the inception of the co-operative scheme ir New Zealand, and it is not too much to say that but for the assistance giver by the banks, the dairy factories as i whole would not be in the flourishing position they are to-day. In view of the services rendered tc the dairy industry, it is to be regrettec that the Government, in framing its proposals, has decided to take awaj from the trading banks an important portion of dairy produce finance which in the past has been handled by them with the utmost satisfaction to al: parties. The loss of the London exchange in connection with exports of this produce will make unprofitable the working of some of our branches, the existence of which has only been justified because of dairy factory connections.