COMPANY MEETING

NATIONAL PROVINCIAL BANK LIMITED

SURVEY OF HOME AFFAIRS MR. COLIN FREDERICK CAMPBELL'S SPEECH

TIE annual general meeting of the shareholders of the National Provincial Bank, Limited, was held on Thursday, January 27th, at the head office, 15 Bishopsgate, London, E.C.

Mr. Colin F. Campbell (the chairman) said : I am glad to be able to report that the business of the bank continues to expand, and that the turnover for the past year shows a very marked increase when compared with 1936.

Curran, deposit, and, other accounts.stand at £320,246,414 17s. 7d., which is slightly less than last year's total. With regard to the small decrease Shown in the deposits, the balance-sheet, of course, represents our position on the last day in the year : actually the deposits through- out the year, judged by the monthly averages, were in excess of the

average for 1936. - -

We are glad to report a net profit of £1,874,959 as. 6d., being an increase of £104,786 t5i. 6d. over the previous year. The dividend continues at 15 per cent., and after allocating Lioopoo to Bank Premises Account and L250,000 to Pension Fund against £200,000 a year ago, and making a transfer of L500,000 to Reserve Fund, there remains to be carried forward the sum of £573,714 Is. 8d.

Shareholders will remember that in 1931 we made a transfer of Li,479;416 from the reserve in consequence of the unprecedented fall in security Values, and we have now made this substantial transfer of £500,000 towards restoring the position.

SURVEY OF liOME AFFAIRS.

The past year has not been free from events which have given rise to anxiety of one kind or another in the minds of those who take a thoughtful interest in world affairs, but in retrospect and in com- parison with preceding years, there can be no doubt that, on balance, substantial progress in economic recovery has been achieved- in this country. Tests applied to all significant points indicate increased general prosperity.

Taking the year as a whole, the volume of employment has never been higher anci—more important—there has been a heavy reduction in unemployment in most industries .and in all main districts. It is true that recently the gain in employment has not been fully main- tained, but making allowance for the seasonal factor, we are justified in looking upon this contraction as a pause rather than a general set- back. The official index of production shows an appreciable increase for 1937 compared with 1936; whilst the index of wage rates con- tinues to rise. Retail sales and bank clearings have generally speak- ing, increased throughout the country and furnish evidence of augmented consuming power.

General progress notwithstanding, doubts are now being expressed as to the likelihood of continuance of the present level of activity, and, indeed, fears of a further pronounced economic recession are by no means rare, particularly in quarters where economics is an academic study. From one aspect these fears indicate a caution due to the bitter experiences.of the slump years. It is good that lessons of the past shall be kept in mind, but before we allow caution to outweigh confidence and degenerate into pessimism, we should be sure that existing circumstances warrant this.

The main sources of our weakness in the great depression of 1930- 1933 are now sufficiently well recognised to enable us to say that not one of them is in active operation today. .

In spite of increased calls on the Exchequer the budget of ordinary expenditure is well balanced, and although there still remain a further two months to the end of the financial year, an enhanced level of incomes and profits should ensure that the Chancellor's estimates are reached. The case was very, different seven years ago.

In 1931 we were firmly attached to the Gold Standard at a period when we were unable to resist sudden and heavy pressure for cash payments across the foreign exchanges. Today we have in the Exchange Equalisation Account a means which should prove adequate in neutralising exchange pressure in meeting potential demands for repatriation of foreign owned assets.

In 1931 confidence in the position of this country was at a very low ebb abroad ; whilst now our economic prestige stands high in the minds of foreigners.

Today we are in a position, through the operation of tariffs and similar means, to negotiate in the assurance that we may secure equitable treatment in overseas trade ; seven years ago our industries were largely unprotected at home and at a relative disadvantage in many export markets.

Prior to the great depression credit was comparatively restricted ; now we are assured of a continuance of cheap and plentiful credit.

In some quarters concern has been shown regarding the increase in 1937, compared with 1936, of £86 million in the adverse balance of our foreign trade account, and comparisons have been drawn with the position in 1931. It should be borne in mind, however, that seven years ago the widening deficit on foreign trade account was due in appreciable measure to a decline in exports : during the last year our exports have steadily advanced.

TRADE BALANCZ AND BALANCE OF PAYMENTS.

A large part of the increased value of our imports during 1937 was due to the steep rise in world prices of a number of primary commodities which took place wainly in the first half of the year.

In recent months there have been marked reductions in the prices of a considerable range of world commodities. If we take only eight of the more important descriptions, our imports for the first eight months of 1938 at present prices will, in comparison with the same period of 1937, cost us perhaps £20-25 millions less, On the assump- tion that quantities are unchanged.

In any event, the balance of trade is only one ingredient—though the most important—in our net balance of payments abroad. We shall have to wait for some time for the official estimates of inviAble items, but such information as we have readily available, for instance, the rise in shipping activity and freights, supports the idea that ' net invisible exports will go a considerable way to counterbalance the increased deficit on trade account.

PRICES : RISING COSTS.

The rise in primary product values, to which I have just referred, was principally due to unjustified fears on the part -of industrial consumers' of. a shortage of future supplies, and the high levels reached in many instances were as much unwelcome to producers as they have proved to be to consumers. One of the t ff.:as of the increase in pri:nary values was to stimulate the rising tendency both in the cost of lying and the level of general industrial costs. These tendencies have caused some concern in all quarters, hut we niay expect that the reduced primary price levels now prevailing, which in the main offer only a reasonable margin to the averatte producer, will in due 'course exercise a moderating effect on the future course of retail prices and production costs.

During the last few years standing charges in the shape of Deben- ture interest, &c., have been greatly reduced and there has been a considerable measure of capital reorganisation. Further, the pro- portion of industrial profits which has been placed to reserve during the last four years of growing prosperity has been, generally speaking, very greatly in excess of similar apportionments in the years of prosperity prior to 1931. We may, therefore, be tolerably sure that, providing reserves are maintained in a more or less liquid form, industry will be far better placed in dealing with any serious deterioration of the situation which the more distant future may have in store.

If I have dwelt at some length on the factors justifying confidence in our present position it is because I believe in its fundamental strength and soundness, and well know the mischief often worked by fears which have no foundation in fact.

Two items in our balance of external payments, namely, short and long term capital transfers, have in recent times been the subject of considerable comment. Modern movements of short term capital are due to a large extent to the state of political and economic uncertainty which prevails in a number of important countries and will diminish as these causes are remedied.

In the meantime the exchange funds and central banks of the principal countries should be able to control the situation.

LONG TERM CAPITAL INVESTMENT.

The overseas movement of long term capital is from our point of view a much more important matter. The function of our overseas investment for many generations in the evolution of ttiis country on the one hand, and of the Empire and relatively under-developed foreign countries on the other, is sufficiently well understood to enable us to discuss our future policy in this respect. Foreign investment should depend on two things—a surplus of income in the lending country and reasonable opportunities of capital con- struction which will show a return sufficient to provide the service of loans in the borrowing Country. There is no doubt that potential avenues of capital improvement throughout the world do exist.

Of the main factors responsible for the slowing up of our overseas investment in recent years, some exhibit the features of permanence and some are clearly of a transient nature. If we exclude the teeming populations of the East, the increase of numbers in some countries, especially in the Empire, is progressing at a slower rate than hitherto ; and some of these countries have now accumulated 'considerable domestic capital. In a number of cases borrowers at long term took, especially in the post-War years, rather more than theysould easily assimilate and found some difficulty in meeting their external obligations when the depression of 1930-1931 set in ; and further we in this country were compelled, for reasons connected with the crisis of 1931, to place an embargo on the export of capital.

BORROWERS' CREDIT IMPROVED.

It cannot be seriously doubted that the position of many potential borrowers, especially within the Empire, has very greatly improved in the last few years.

It has been said that, having in mind the present trend of popu- lation in this country and elsewhere, we should not encourage primary producing areas to borrow further capital from us on the ground that they will encounter increased difficulty in marketing their products in payment of interest and sinking fund. This belief is surely without foundation. The potential increase in general consuming power of even a static population (and we have not reached this point yet) is very great. This is clearly true, for example, in the case of the world commodities with which we clothe ourselves. It is less obvious in the case of foodstuffs, but even here it is certain that we could consume a great deal more xvith benefit to the nation's health.

BUSINESS CONFIDENCE.

There is no doubt that the past year has seen a marked improvement in economic conditions in many countries, and this improvement may be expected gradually to lessen political tension which does so much to limit confidence and retard further recovery.

Business confidence is a delicate plant which, if it is to have any great degree of permanence, must be rooted in good soil. Wo (Continued on page 206.)

COMPANY MEETING

can surely find this foundation if we contemplate the achievements of the last few years of recovery, both here and abroad, and view in their proper perspective both those factors which give rise to doubt and those which lend hope for the future.

Mr. Theodore Goddard said : I have the honour to move the next resolution. Once again the directors have been good enough to ask me to do it, and it is a resolution which I know will commend itself to everybody in this room—a resolution of our thanks to our directors, to the managers, and to the whole staff for their services.

I would like, Sir, if I may, on behalf of the shareholders, to thank you and congratulate you upon your admirable statement. It is a matter of great interest to everybody and something we will take away with us and read and consider.

I know, Sir, I am expressing the undoubted view of all the share- holders when I express to you and your colleagues our gratitude and our thanks for your devoted service in guiding the destinies of this great Bank. I should also like, if I may—I want to be very short—to associate myself and the shareholders with your con- gratulations to Lord Pender and Sir Percival Perry on the great honour which His Majesty has bestowed upon them. It is indeed pleasing to us shareholders to see our directors recognised in this way. I should like, further, Sir, to say a word about Lord Wolmer. It is very pleasing to us to see him there, particularly to me, because, Sir, for a good many years I worked with him on another board. I can commend him to you and can say of him that he has the judgement of Solomon and the patience of Job.

Then, Sir, let me pass to Mr. Cornwall and his associates, the joint general managers. They are splendid fellows and do a splendid job of work. Mr. Cornwall, I think I am right in saying, has the devotion of everybody on the staff throughout the whole of this great organisation, and, indeed, of the customers. I know I am right in saying that he is creating traditions which must always be a permanent record for the benefit of this great institution.

From that, Sir, I pass very shortly to the managers, the branch managers and the whole staff. Whatever branch one goes into of this Bank you find the same pleasant atmosphere as exists at head office—the desire to assist ; the desire to be of service.

Well, ladies and gentlemen, with those few observations I move the resolution : "That the thanks of the shareholders be given to the directors, general managers, branch managers and other officers of the bank for their efficient management and services." I am going to call upon Mr. Carron Scrimgeour to second that.

Mr. H. Carron Scrimgeour : My Lords, ladies and gentlemen, in seconding this motion, I should like to endorse very fully everything Mr. Goddard has said. I feel that we, that is to say, the shareholders, are fortunate indeed in having such a splendid body of directors, managers, branch managers and other officers to look after our interests. I consider that we owe them an immense debt of gratitude, and I should like to take this opportunity of congratulating them most heartily on the results which have been achieved. It is with the very greatest pleasure that I second this motion.

The vote was cordially passed.

The chairman : Mr. Theodore Goddard, it is extremely kind of you to propose this resolution in the way you have done. I am going to ask Mr. Ernest Cornwall, the chief general manager, to reply for the general managers, the branch managers and the staff. You have already heard me, and therefore I will only say that it is the one desire of the Board of this Bank to serve the shareholders and the public to the best of their ability throughout the year. I thank you very kindly and very warmly. (Applause.) Mr. Ernest Cornwall (chief general manager) said : On behalf of my colleagues in the management of the bank and all members of the staff, I should like to express our sincere appreciation of the kind observations made by Mr. Theodore Goddard.

The directors keep in close touch with the staff as a whole through the management and our staff association, and as a result there is a feeling of confidence and a happy relationship throughout the service.

I am proud to be at the head of such a loyal staff, who are always ready to give willing and cheerful service to the bank's many customers to our mutual advantage.

You will remember that last year I referred to the staff effort to aid the unemployed in the distressed areas. Interest in this is well maintained and the subscriptions—a very substantial sum— continue to increase. There is hardly an office in the bank in which the staff is not taking an active participation in some form of useful social service.

It was my privilege recently to visit the North Shields Unemployed Club and also the settlement in Pontypridd—both of these institutions are continuing to do most valuable work.

In the agricultural training centres 260 youths have now completed the course under the farm work scheme and all have been found suitable occupation as a result.

Under the Fairbridge Farm School forty-two children have been assisted and are now either settled or are on the way to the British Columbia and Australian schools. Thank you all very much for your expression of appreciation of our services.

An extraordinary general meeting was then held for the purpose of passing the special resolutions (of which due notice had been given) for sub-dividing the bank's capital into shares of smaller denominations, to take effect as from March 7th, 1938.

The special resolutions were formally moved by the chairman, seconded by Captain Smith and unanimously adopted. A vote of thanks to Mr. Colin Campbell for his able conduct in the chair, proposed by Mr. Dudley H. Illingworth, and seconded by Mr. John Cadogan, concluded the proceedings.