BANK OF NEW ZEALAND.

Gisborne Times, Volume XXVI, Issue 2228, 27 June 1908, Page 3

BANK OF NEW ZEALAND.

ANNUAL MEETING.

(Continued from page 1.)

tho prices of commodities, and also to tho probability tliat considerable additional areas will bo marketed through tho offocts ol' tho high graduated kind taxes which are to become operative presently, and which wore designed to bring about tho disnorsnl of big estates. Moreover, it is confidently anticipated that, as the result of the Nativo Land Commission now sitting, very largo blocks of lund, especially m tho Auckland Provincial District,' which up to the present have boon lying waste, will bo available for selection by intending settlers in the near l'uturo. With ii sharp decline that hus occurred in the value of wool( which is now lower than it has been since 1901-2) the outlook for the Dominion of New Zealand is not so rosy ns it was when I addressed you on a similar occasion in 1907. Wo are experiencing a sot-back; but, having regard to tho prosperity wo have enjoyed for the past ten or twelve years, and tho national and individual wealth winch lias accumulated during the years ol plenty, there is little doubt that, the community can stand the slight business cheek wo have mot, without trepidation. For tho benefit particularly of our shareholders who reside outside of Now Zealand, you will perhaps permit me to emphasise this point by the aid of official figures: —7 The total amount of tlie deposits in the Post Office Savings Bank of Now Zealand on 31st December', 1887, was £1,513,084; ten years later on 31st December, 1397, they had grown to £4.714,924; and at the dose of 1906 they stood at £9,953.205; and at tho end of last year they amounted' to the substantial sum of £11,523;230. Compared with 1897, last year shows an increase of 142 per cent., and compared with 1887, an increase of 536 per cent. Tho revenue and expenditure of the General Government compare as under:—

These figures, I think, prove conclusively that -I am not unduly optimistic when I say that -at no period of our history were we better situated than we are to-day to face Id setback in the prosperity we have enjoyed during the last few years. lam no prophet, but I believe that its duration will not be so long as some -anticipate. If we turn to America (where tlie commeria.il set-back had its origin), wo have a re-assuring report: from Mr. Seymour Bell, the -British Commerical Agent in the United States, who -points out that tlie panic there was entirely financial, and though it caused for the time being a widespread diminution of trade and industry, still goods were not thrown upon the markets at ruinous prices, and there has been a prompt and effective check imposed upon production. Above all, it has to be considered that the farmers, who still form the backbone of American prosperity, have been very little affected. Tlie prosperity of • this class is exceedingly -great, and a country that produces crops valued at one thousand five hundred million pounds sterling (£1,500,000,090) is unlikely to suffer long from industrial depression. Of course the Presidential election this year will cause a disturbance ; but, on the other hand, the Great Republic is promised a bumper harvest next month.

Tlie Bank of England discount rate is now 2-J per cent., or only a half per cent, above the traditional, minimum. This cheapening of money in London has already had an excellent effect in stimulating investment in gilt-ed-ged securities. In New York according to recent mail advices, call- money was at lj; per cent. In European capitals, the tendency of the money market is downwards. Cheap money must inevitably exercise a- beneficial influence on trade and commerce. I do not wish to be misunderstood. While I believe there is little justification for the assumption that, the check we are experiencing will last long, still, with a. less buoyant commercial barometer, it is obvious that caution should be our watchword, and this policy should, in my opinion, be adopted by some business houses who, in recent ymrs, have'been overtrading and somewhat indiscriminate in the giving of credit; by farmers who have been and are paying excessive prices for land—both leasehold aim freehold—and by others, who, with little regard to the future, have beenliving at an extravagant late. Board of Directors.—Mr. F. de C. Malet, in consequence of ill-health, resigned his position ns a Director on 31st March last, and the Government was, pleased to appoint Mr. James Bennie Reid in .succession to that gentleman. Wo are much indebted to the members of tlie Jxindon Board for the care and discrimination thev exercise in tlio conduct of our business. Staff.—lt again affords me- much pleasure to record iny colleagues’ and my own appreciation of the valuable services accorded to the Bank during 'he past- year by the- London. Australian, Fiji, and New Zealand stuff. To Callender, vour l and our thanks are especially due for the able and conscientious manner in which be lias discharged the onerous duties of General Manager. In a practical manner the Board have recognised the staff’s good work by paying them a bonus of 5 per cent, upon all salaries..

I now formally move the adoption of tlie report and bn lance-,sheet. If this be carried, the dividends proposed —namely, 21 per cent .on the preference shares, making Ti per cent, for the year, and 5 per cent, on the ordinary shares, equal to 10 per cent, for the"same, period—will be payable in Wellington- on Monday, 29th inst..

and at the branches upon receipt of advice. ———

MR. WATSON'S REMARKS. Mr. Watson, in seconding the motion, said: — I have pleasure in seconding -the

motion for tho adoption of tho report and balance about. ■\Vhon 1 first been mo commoted with tlio Bank of Now Zealand an 1894, it was suv unpleasant duty to report to tbo then Colonial Treasurer that, out of £11,000,001) of tho Bank's so-called assets, less than one half were profit earning, while interest, or its equivalent. was being paid on deposits and other moneys, aggregating no less than £G,300,000. This statement, without going into further details, will suffice to niako clear to you what an up-hill battlo has been fought to obtain the position occupied to-day. In tlio biilanco-shocb now before you, there are profit earning assets amounting to over £15,000,000 all sound and good, against interest bearing liabilities of about £8,000,000. It is perhaps, needless to say that in 189-1, although tlio goodwill was of great prospective valuo, tlio Bank was making no profit at all; now, niter liberal provisions, the not profit for tho year ended 31st March, 1908, is £309,922. Shareholders ol 1891 will naturally say: “It is a splendid result for the Bunk, hut by our heavy contributions wo helped to bring it about, yet, where do wp come in? for wo went for years without any return at all, and even now wo receive only two per cent, on tlio money wo contributed.” ' Ladies and gentlemen, I say that 1 firmly believe you will not have much longer to wait before receiving a more adequate roturn. The other- Banks doing business in the Dominion have reserve -funds in proportion to their liabilities which east o ur reserve fund somewhat in tlio shade, but ours is 'mounting up very handsomely, and if we are able to add substantially to it next year, as well as pay increased dividends, I should advocate that course.

Then there is the question of probable increases of capital in the' future. Tho banking business of tho Do, minion must go on increasing, and there is every reason to believe that this Bank will maintain- its ratio in tlio increase. More capital will be required to balance the greater rosponsibilites, and shareholders should then have tho opportunity of investing profitably, or transferring their options at a premium. There should be no doubt that your rights will be respected, both as regards capital and dividends. The Right Hon. Tho Prime Minister, speaking in Parliament hist year, pointed out clearly that tlio ordinary shareholders’ rights in the Bank and its goodwill were paramount. In the course of liis speech lie said: —

“Tlie Government had only a comparatively small interest in the Bank. . . . Tlie shareholders controlled tlie whole of tlio deposits, amounting to about thirteen millions sterling; they also controlled the whole of the bills under dis-

count-, and owned by far, tbo greater proportion of tlio goodwill of the Ban'k’s business The shareholders of the Bank, who, though rescued by the Colony coming in, had still rights, that even the almighty power of Parliament could not ignore. They were bound as a matter of fairness and justice to see that shareholders’ rights • were protected. . . . .Should the State take over the Bank of New Zealand, tho shareholders would still liavo a right to keep their own business, to keep their own deposits, to preserve their own goodwill, and no Act of Parliament could take away these rights from them any more than by Act of Parliament you could shift- New Zealand to some other part of the world.” This leaves no doubt as t 6 - the shareholders’ rights. It has been urged upon mo by prominent shareholders that the majority do not fully comprehend the position as between tlie Government and tho ordinary shareholders, and that I should make it clear on this occasion. Briefly, it- is tliis— r J lie Government own 75,000 preference shares of £6 13s. 4d each, fully paid up, and the ordinary slmreliolders own 150.000 ordinary shares, also of £G 13s 4d each, but having £3 6s 8d paid up. Dividends are arranged on a sliding scale, -so that, when dividends higher than five per cent-, are' paid, tho ordinary shares bear double increase to the Preference shares-;' thus, if fifteen per cent, were v paid on ordinary shares, ten per cent, would be the rate on the preference shares, but by special limit, ten per cent, is tlio maximum rate for them, whereas the rate on ordinary shares is unlimited as in any other Bank. The Government guarantee £1,000,000 stock issued by tlie Bank in London, and due to be repaid on 19th July, 1914. On tlio Board of the Bank the Government have at present four nominees, and two members are elected by tlie ordinary shareholders. The Government appoint tlie chief auditor, and the Governor in Council in-ay veto any resolution passed by the i.lmrebolders. It- will therefore be seen that the Government's interests are more than amply safeguarded. When the guaranteed stock is paid off, it is reasonable to suppose that tlie shareholders -will have representation somewhat more in accordance with their larger interests in the Bank. Indeed, for my own part—and I know that Mr. Kennedy agrees with me—l think'that in fairness and justice, the shareholders should even now, have a greater cay ill tlie -affairs of the Bank, which is principally their own institution, although wc recognise that tlie Government should have efficient checks, and fair representation on tlio directorate. In accordance with the Act of Parliament, I ant the next to retire from tlie Board by rotation, and again I shall offer myself for re-election at the bands of tlie shareholders. I would ask those who consider that I have served them well for the past fourteen years, t 0 kindly give me proof of their appreciation, by not forgetting to record their votes for me, when voting papers reach them.

REPLY BY CHAIRMAN TO VOTE OF THANKS.

Later on, Mr. Beauchamp, in acknowledging the vote of thanks on behalf of the Directors, said:—

Before dispersing, I think it will be interesting if I read an extract from a report just received from flic .Manager of our Produce Department in London..

Writing to us under date loth April, ho says:—

“Wool.—The course of the market

during the past six months has been decidedly unfavorable. With comparatively few exceptions all classes of raw material have become cheaper within that period, but the depreciation has probably Ijeon greater in wool than in any other 'kind. The slump, it is admitted on all hands, was entirely due to the American crisis. If it had not been for the unfortunate condition of affairs in the States, trade hereund on the Continent throughout' the curreht year would doubtless have been active and . remunerative. Stocks ,at the beginning of the season Averts never lighter, and it Avas entirely owing to tlie favorable outlook that the principal buyers operated so freely at high prices in Australia. Never were high hopes so completely dashed ho the ground’. For some months past, buyers have been handicapped by the difficulties they have experienced in financing the dear wools they have imported, and on which they are suffering heavy losses. Their purchasing powers are consequently on a much more reduced scale , than formerly and it is hardly to be expected that they are in a mood to enter into fresh commitments, especially lyliilo values are still further declining, “While the trade looks back to

America, as tlie originator of all its recent- troubles, it, at the same time, looks forward to relief coming ‘ from the same quarter at no very distant date. Whether this hope will be realised it is difficult to say, but there are signs that the position in the United States is gradually improving. As further progress towards recoverv is made, it is expected that aa-001 will be one of tlie first commodities which Avouhl benefit. Stocks of imported wool in the States arc very small, and any slight revival in tlie trade ivould at once drive Americans to this market for supplies. In addition to this, the market for coarse cross-

broils has been adversely affected by ‘bear’ selling of tops on a somewhat large scale. The weak state of the market lias greatly assisted bearing ope rations, and several dealers in Bradford liavo been taking lull advantage of the opportunity offered. Now that prices liavo reached such a low level, one is led to the opinion that nothing would suit buyers better than that values would continue abnormally low until they have secured- tho bulk of the supplies coming on the market in tlio near future. Alter that, should circumstances change, they would doubtless become active •bulls.’” “Meat.—Tlio season has been late in starting. Mutton has met with a dragging market for some time past, but the demand lias lately improved, thanks to tlio reduced supplies of River Plate Sheep, and prices have been satisfactory. iLiinb.—lt is expected that the Franco-British exhibition, which is to be hold in London this year, will attract a large number of people from many quarters of tho globe to this country during tho summer. New Zealand lamb is much to the lore —under diffident names— in tlio menu oi : most of our hotels uiiu , restaurants, and tlie demand should prove more than equal to tlio supply, which, owing to the dry weather. in the Dominion, is predicted to fall short of that of previous years.” I am pleased to quo to these views respecting tho market for Wool and Frozen Meat, as they coincide so completely with my own.

Revenue. Expenditure. £ £ 1890-7 ... 4,798,708 4.509,981 1906- ... 8,478,950 7;774.92'6 1907- ... 9,003,989 8,213,965 PUBLIC AND PRIVATE WEALTH. Public property, including Crown Lands, Local Authorities’ Lands, Educational Lands, Church and other Lands, Government Railways. Tel * graphs, and other Public Works: — 1887 approximately £45,000,000 1897 approximately £50,000,000 1900 approximately £71,749,429 Net private wealth, calculated on the assumption that the wealth of the living is proportionately equal to that left by the dead : — Total. Per Capita. 18S6 ... £117.087,942 £214 1890 ... £170,007,813 . £238 1905 ... £25S,710,000 - £293 Mortgages and Repayments: Mortgages. Repayments. £. £■ 1898 ... 6,702,081 5,516,598 1901 ... 7,431,698 5,082,617 1905 ... 11,009,512 7,812,657 1900 ... 13,110,090 8,108.093 1907 ... 141802,895 9,013,122 Bankruptcy returns: Number of Assets Dividends bankruptcies, realised paid (inc. pref. . claims.) 1887 .1,030 £135,633 £100,255 1897 415 £40,942 £45,015 1907 350 £59,849 £42,459 Manufacturing industries: Capital No. of -- employed.- employees. 1891 ... £5.201,826 25,663 1896 ... £5,796,017 27,389 1901 ... £8,408,564 46,8-17 1006 ... £12,509,286 56,359 Population movements: Total arrivals in New Zealand for 10-vears—1888-1897 185,641 Total departures, ditto ... 176,840 Net . gain in ten years by immigration 8,801 Total arrivals irTXew Zear land for 10 years—1898-1907 282,355 Total departures, ditto ... 211,917 Net gain in 10 years by immigration 70,438