COMPANY MEETING

BARCLAYS BANK LIMITED

OVERSEAS TRADE Mr. EDWIN FISHER'S SPEECH The Forty-fourth Ordinary General Meeting of Barclays Bank was held on Thursday, January 59th, at Southern House, Cannon Street, Mr. Edwin Fisher, the Chi'irman of the Bank, presiding.

The Chairman : My Lords, Ladies and Gentlemen,—I will call upon the Secretary to read the Notice of Meeting and the Certificate of the Auditors which appears at the foot of the Balance Sheet that has been submitted to you.

The Secretary (Mr. W. N. Seeley) then read the formal Notice convening the Meeting and the Report of Messrs. Price, Waterhouse and Co. and Messrs. Kemp, Chatteris, Nichols, Sendell and Co.

The Chairman : My Lords, Ladies and Gentlemen,—Is it your pleasure that the Report and Accounts submitted be taken as read ?

As will be seen from the Report, Mr. William Favill Tuke has retired from the Board. This step, which he decided to take on the grounds of health, brought to an end a term of service with the Bank and its predecessors extending over a period of 54 years—a proud record. When he gave up the Chairmanship, I made reference to his long association with the Bank and to his achievements, which are known to you all. We hope that he will find enjoyment in his well- earned retirement for many years to come.

During the year, the Directors have elected to the Board The Right Hon. Lord Cornwallis, M.C., Mr. Lawrence Emlyn Douglas Bevan and Mr. David Martyn Evans Bevan. Lord Cornwallis has many associations with Kent and will be of great assistance to us in connection with our business in that County. Mr. L. E. D. Bevan has been a Local Director of the Bank at Lombard Street for several years. Mr. Evans Bevan has numerous interests in South Wales, where, as you know, we have important Branches. You will be asked to confirm the election of these Directors, at a later stage in our proceedings.

That Mr. B. J. Foster should have felt obliged to retire from the service of the Bank on account of ill-health is a matter of great regret to us. Mr. Foster served the Bank for 38 years and had been con- nected with our foreign business for 27 years. Formerly Assistant Foreign General Manager, he was appointed Foreign General Manager in 1934. I feel that you would wish to join with us in expressing gratitude to him for his valued services to the Bank and to wish him well in his retirement.

THE BALANCE SHEET

You will see from the Report and Accounts submitted to you that the total of our Current, Deposit and Other Accounts on 31st Decem- ber last amounted to £433,081,185 and revealed a slight reduction from the figure of £434,645,323 at the end of 5937.

If one takes the figures shown in our Monthly Statements of Average Weekly Balances and compares the movements in the total of our Current, Deposit and Other Accounts from month to month in 1938 with those in 5937, it will be seen that there has been remarkably little change. This we consider a most satisfactory feature, for during the past year, in view of the general atmosphere of uncertainty at times prevailing, which resulted in a large withdrawal of foreign balances from London, a wider fluctuation in our figures might have been expected.

The rise in Acceptances and Endorsements, etc., for Account of Customers, from £8,532,516 to £14,933,082 between 31st December, 1937, and 31st December, 1938, does not indicate the expansion in trade which might be inferred from an increase in this figure in the Balance Sheet. In addition to the usual items which go to make up the total, certain other engagements entered into on behalf of Customers, which had not been shown previously, have now been included. This accounts in large measure for the increased figure appearing in the Balance Sheet.

Our Cash in Hand and with the Bank of England at the end of December last stood at £53,241,449 and the ratio of this sum to the total of our Current, Deposit and Other Accounts was 12.29 per cent. The next asset, Money at Call and Short Notice, which at the end of the year amounted to £26,207,550, is one that can very quickly be turned into Cash. It consists of money lent in the Money Market, mainly to Bill Brokers, although a minor part is represented by loans to Members of the Stock Exchange. On 31st December last, the bills we had discounted amounted to £54,594,153, which included £30,455,000 of Treasury Bills. At the close of the previous year our total of Bills Discounted was £50,362,681. The increase in our holding of bills was secured in spite of the fact that there was a reduction during the year in the average allotment of Treasury Bills at the weekly renders to £40 million, compared with £43.3 million in 1937. It is essential for the efficient working of the banking system and of the Money Market that there should be an adequate supply of bills and, in view of the dependence of the Discount Market on the Treasury Bill, and the important role which these bills play in enabling the Banks to secure a proper distribution of their assets, it is to be hoped that the Authorities will bear in mind the requirements in this respect in framing future policy.

The total of these four exceptionally liquid assets in our Balance Sheet represented no less than 34.38 per cent. of our Current, Deposit and Other Accounts at the end of the year. It will be seen, therefore, that, in the employment of a large proportion of the assets of the Bank, the primary consideration is liquidity, rather than the acquisi-

tion of profit ; but the maintenance of liquidity also depends upon the continued efficient functioning of the Money Market..

THE MONEY MARKET A feature of the London Money Market in recent years has been the low level of rates both for short loans and for discounts. These low rates are largely a reflection of the cheap money policy officially pursued in this country since the middle of 1932. For the bulk of our loans to the Money Market we earn only per cent. per annum. Discount rates for high class bills have shown some increase during 1938, the average rate at which three months' Treasury Bills have been allotted in response to the weekly tenders being 12s. 4d. per cent. per annum, compared with the low figure of us. 2d. per cent. per annum in 5937. This rise, however, was due to the higher rates prevailing around the period of the international crisis in September and to the slightly more stringent monetary conditions at the close of the year, which forced the Market to borrow large sums from the Bank of England.

In addition to its effect on discount rates, the crisis had other reactions on monetary conditions in this country. London has been for generations the principal international monetary centre of the World. Foreign money employed in international markets is, however, always liable to sudden movements and the possibility of such movements is greater when, as in recent years, a considerable part of the foreign balances held in international centres appears to be " fugitive " money seeking temporary security rather than profit. It was not, therefore, surprising to see, as the result of the crisis in

September last, large transfers of these balances taking place from London to New York, a centre far removed from the fears that over- shadowed Europe. The flow of funds to the United States has also been encouraged by the economic improvement in that country. In addition, there has been a repatriation of balances to France, notably in recent months, as a result of the initial success of the steps taken by the French Government to restore economic and financial equilibrium.

At times last year the transfer of funds from the United Kingdom was reflected in a tightening of conditions in the London Money Market, but having regard to the magnitude of the outflow, the fact that the Market was only temporarily affected stresses the value of the new monetary technique evolved in recent years and the skill of the Authorities in managing the situation during an abnormal period.

INVESTMENTS

The total of our Investments, excluding our holdings in Sub- sidiary Banks, amounted at the end of December last to £96,876,802 and showed a contraction of £5,546,593 compared with the end of December, 1937. Of this total, £89,527,002 were securities of, or guaranteed by, the British Government and a very high proportion of these has a definite maturity date. Throughout the year, the total of our Investments was maintained at a somewhat lower level than in 1937, partly because we considered it prudent to increase our liquidity by holding a larger portfolio of bills.

Included in the item of Investments in Subsidiary Banks is our Shareholding in Barclays Bank (Canada). I mention this specially as, in October last, I visited the Branches of that Bank in Montreal and Toronto. Instituted as recently as 5929, it is a newcomer to Canada and the progress made has been satisfactory and steady.

ADVANCES

There has been an increase in the total of our Advances to £199,452,980 at the end of December last, against £596,264,896 on December 31st, 1937. Banking advances tend over a period to reflect changes in industrial and commercial activity, although there is frequently a time lag before these changes are apparent in the demand for accommodation. According to the calculations of the Board of Trade, industrial production in this country reached a record high level in the December quarter of 5937 and, thereafter, there was a moderate setback. The total of our Advances, however, continued to increase and reached the record figure of £202,668,708 at the end of June. Since then, there has been some reduction, but the decline has been small, the total at the close of the year being 1.6 per cent. lower than on June 3oth, while, as I have already pointed out, it was greater than at the end of 5937.

The detailed analysis of our Advances which was made at the end of October last shows that, at that date, the number of Customers having Advances from the Bank was 216,210 and the average Advance was £893. The distribution of the total amount among the different trades, industries and private borrowers varied little from the propor- tions shown in the analysis for the previous year.

The accommodation which we had granted to farmers, as at the end of October last, amounted to nearly £54,000,000, and represented about 7 per cent. of the total of our Advances then outstanding, the number of Farming Customers having Advances being some 27,000.

In addition to a general fall in agricultural prices last year, there was a heavy decline in the prices for certain products, which naturally affected some districts more than others. In these districts, the position of the farmer is serious and, in view of the national importance of the industry, this is a matter for genuine concern. Fortunately. British farfning is very diverse in character. At the same time, this diversity is a difficulty which faces the Government in its attempts to afford assistance to the industry as a whole, for what may help one farmer may be of no assistance to another. One must not, of course, overlook the numerous ways in which the Government has rendered help to the farming industry up to the present time. The Wheat Act, to mention only one measure by which the Government has supported the industry, has undoubtedly done a great deal to meet the serious fall in the price of wheat. In recent weeks, however, owing to the low prices ruling last year for home-bred sheep and home-grown barley, which have caused heavy losses to many farmers, the Govern- ment has had represented to it the urgency of finding methods for aiding those branches of farming, and a review of the situation is understood to be in progress.