8.—16

No longer will it be possible for credit created by the Bank to find an outlet to any appreciable extent in the purchase of goods from overseas (except by using the Bank's statutory reserves for that purpose). Whilst the demand for commodities was being partially satisfied by the utilization of the Dominion's available sterling reserves, the effect of the expansion of credit on internal prices was not very great; but, in existing circumstances, any additional credit expansion would inevitably tend to cause, sooner or later, a general rise in prices, with a consequent diminution in the value of all savings, wages, salaries, and pensions. The Board would therefore stress the desirability of the avoidance of further recourse to the Reserve Bank for accommodation and of limiting governmental expenditure to such a sum as can be raised by taxation in addition to what can be borrowed from the public, either in the Dominion or overseas. If such a policy were adopted, and, still further, if steps were taken to reduce the outstanding advances from the Bank, there would be a better prospect of the Bank being able to assist by granting accommodation during relatively unsatisfactory export periods without jeopardizing the financial economy of the Dominion. Statistical Summary. As the Bank has published a monthly statistical summary since June, 1938, tables of banking and other statistics are not given so fully in this report as on previous occasions. Staff. The Board wishes to place on record its indebtedness to the staff as a whole for the loyal and efficient way in which the work of the Bank has continued to be performed. For and on behalf of the Board of Directors, L. Lefeaux, Governor. 20th June, 1939. W. L. Ward, Deputy Governor. Profit and Loss Account for Year ended 31st March, 1939. Dr. £ s. d. Cr. £ a. d. General charges, including salaries, rent, Balance of profit after making provision cost of note-issue, and other expenses 108,902 7 6 for rebate on Treasury bills not yet Balance, being profit for year .. .. 250,285 10 4 due, and for sundry liabilities and contingencies .. .. .. 359,187 17 10 £359,187 17 10 £359,187 17 10 Profit and Loss Appropriation Account. Dr. £ s. d. Cr. £ s. d. Payments to New Zealand Government Balance at Ist April, 1938 .. .. 195,811 3 7 in terms of section 36 of Reserve Bank Balance from Profit and Loss Account .. 250,285 10 4 of New Zealand Act, 1933 .. .. 195,811 3 7 Balance .. .. .. .. 250,285 10 4 £446,096 13 11 £446,096 13 11 Balance-sheet as at 31st March, 1939. Liabilities. £ s. d. Assets. £ s. d. General Reserve Fund .. .. 1,500,000 0 0 Gold (at face value) .. .. 2,801,791 0 0 Bank-notes .. .. .. 15,246,970 10 0 Sterling exchange .. .. 4,663,051 6 7 Demand liabilities — Subsidiary coin .. .. .. 226,271 6 1 (a) State .. .. .. 4,386,770 2 5 Advances— (b) Banks .. .. .. 8,350,113 9 3 To the State or State undertakings— (c) Other .. .. .. 902,256 19 11 (1) Primary Products Marketing Liabilities in currencies other than Department .. .. 7,235,461 15 2 New Zealand currency .. .. 26,220 12 4 (2) For other purposes .. 12,225,000 0 0 Other accounts .. .. .. 304,583 17 7 Investments .. .. .. 3,689,904 19 2 Profit and Loss Appropriation Account 250,285 10 4 Other assets .. .. .. 125,720 14 10 N.B.—Holdings of sterling have been converted into New Zealand currency at the rate of £100 sterling equals £124 (N.Z.). £30,967,201 1 10 £30,967,201 1 10 W. R. Eggers, Deputy Chief Accountant. L. Lefeaux, Governor. W. L. Ward, Deputy Governor. Auditors' Certificate and Report. —We have audited the balance-sheet as at 31st March, 1939, above set forth, and have obtained all the information and explanations we have required. We have accepted the certificate of the Bank of England as to assets held on account of the Reserve Bank of New Zealand. In our opinion the balance-sheet is properly drawn up so as to exhibit a true and correct view of the state of the affairs of the Bank as at 31st March, 1939, according to the best of our information and the explanations given to us and as shown by the books of the Bank. j* I" Public Accountants, Auditors. Wellington, New Zealand, 24th May, 1939.

Approximate Cost of Paper.—Preparation not given ; printing (635 copies), £8 15s.

Authority: E. V. Paul, Government Printer, Wellington.—l 939.

Price 6d.]

7