COMPANY MEETING

ROYAL BANK OF SCOTLAND ANNUAL GENERAL COURT OF PROPRIETORS THE Annual General Court of Proprietors of The Royal Bank of Scotland was held at Edinburgh on the 24th inst., His Grace The Duke of Buccleuch, G.C.V.O., Governor of the Bank, presiding.

His Grace said :

I presume it will be your pie, su -e that the annual report and balance-sheet, with the auditors' re )ort, k hich have been in your hands for some days, shall be taken a; read.

Before coming to the ordinary t u ;iness cf this meeting, I should like to refer with deep regret to the loss which the bank sustained on July 19th last in the death of Sir Arthur Worley, Bt., C.B.E., who had been an extraordinary director since 1925. Sir Arthur took a keen interest in the affairs of the bank, and on many occasions we had the benefit of his wide experience and shrewd judgement which he willingly placed at our disposal.

To fill the vacancy caused by the death of Sir Arthur Worley the directors elected Sir Walrond Arthur Frank Sinclair, K.B.E., as an extraordinary director. Sir Walrond is well known in industrial circles in the South. He is a director of our associate bank, Williams Deacon's Bank, Limited, and it is a matter of gratification to us that he was able to accept our invitation.

I now come to the figures of our balance-sheet, from which it will be seen that the steady growth in the business of the bank has been well maintained during the year under review.

DEPOSITS.

Our deposits again show an increase of £2,800,000—which is equal to the increase shown in our last year's report—bringing the total up to £69,674,161.

Notes in circulation at £3,021,131 are £91,000 higher than last year. The further increase under this heading reflects the improve- ment in trade and employment.

Acceptances and indorsements of Foreign Bills and other obliga- tions at £4,226,203 show an increase of approximately £700,000, the increase reflecting in some measure our larger imports and the rise in commodity prices and shipping freights.

LIQUID RESOURCES AND INVESTMENTS.

The assets side of the balance-sheet provides ample evidence that the highly liquid position of the bank has been maintained. Cash on hand and with the Bank of England and other London bankers, and money at call and short notice, &c., amount to £15,697,758— representing over 21 per cent. of our liabilities to our depositors and to the public in respect of our note issue. Bills discounted at £3,883,250 show a reduction, compared with last year's figures, of £231,000. As you are aware, we include under this heading our holdings of British Government Treasury Bills amounting to £1,5453000—which is £490,000 less than we showed last year. It will however be seen that we were holding in our bill portfolio at our balance date £258,00o more of commercial bills than we held a year ago.

Our investments in British Government, Indian and Colonial Government securities and other securities have declined by approxi- mately £1,200,000. I am sure you will agree with me when I say it is a matter for satisfaction that in a year when our deposits have shown a substantial increase, we have had to reduce our investments to meet the requests from our customers for advances to assist them in their trading requirements. I would here mention that a large proportion of our British Government securities is in short- and medium-dated stocks, and that all our investments are valued at or under the market prices ruling on the date of our balance.

ADVANCES.

When I addressed you from this chair a year ago I referred to the increase of £625,000 in our advances. I also stated that indications were not awanting that the internal industrial revival and the rise in commodity prices were influencing requests from our customers for bank accommodation, and I am now pleased to report this year a further expansion of almost £4,000,000 in this important side of our operations. The increase is well spread throughout the bank, but I should also add that it includes a substantial amount of very temporary accommodation granted for the payment of estate duties.

PROFITS.

The profits for the year at £636,4r9—are £4,383 more than a yearago. Following our usual practice, all bad and doubtful debts have been fully provided for. APPROPRIATIONS.

The directors recommend that a dividend for the half-year, payable at Christmas, at the same rate as formerly—17 per cent. per annum —be declared, and that the same appropriation as last year, viz. £30,000, be made to Pension Reserve Fund, and that the appropriation to bank buildings and heritable property be increased from £25,000 to £3o,000. We have considered it advisable to increase the alloca- tion to our premises account having regard to the higher costs of reconstruction and repairs. After these appropriations there remains the sum of £94,445— which it is proposed to carry to rest or reserve, which now stands at 4:4,038,616.

BUSINESS OF THE BANK.

It will be seen from the figures .I have submitted that the bank continues to progress, and I am glad to say that our associate— Williams Deacon's Bank, Limited—is sharing in the English industrial prosperity.

SCOTTISH INDUSTRY.

It is pleasing to be able to report good progress in Scottish industry generally.

Coal, which depends so much on its exports, experienced good conditions with better prices during the first six months of this year, but during the past two months less activity has prevailed in the export branch of the industry. Fortunately, the home market continues good, largely due to the busy conditions in the heavy industries.

The iron and steel industry is very busy, and in the steel trade the demand exceeds the output. Furnaces are working at high pressure, and should continue to do so for some time to come in order to cope with the many orders on hand.

While prospects in the light castings branch of the industry still. continue bright, a slight falling-off during the past few weeks has been noticeable.

Manufacturing engineers have benefited from Government orders, and contracts on hand are sufficient to keep works at full capacity for some months yet.

Shipbuilders have experienced a busy year, and output is likely to be the highest for the past six years. For a time in the earlier part of the year work was slowed down owing to the difficulty in obtaining delivery of steel, but that difficulty has now disappeared. The yards that are fortunate in having Government contracts are working at high pressure, but it is, perhaps, disappointing the.. latterly few orders are being received for new merchant tonnage. New Admiralty orders are, however, expected, and with a consider- able amount of work in hand the outlook on the whole in the ship- building industry can be described as promising.

In agriculture, the improvement reported last year has been main- tained. This is largely due to higher prices for which the steadying influence of marketing schemes and other forms of assistance affecting certain commodities is partly responsible.

The fishing industry has gone from bad to worse, and it is to be hoped that steps will quickly be taken to alleviate the parlous con- dition into which this industry has fallen.

IMPORTS AND EXPORTS.

It is with regard to our foreign trade situation that I feel there is cause for apprehension. Our imports are increasing at a much faster rate than our exports. For the first ten months of this year our total imports were £838,000,000—while exports, including re-exports, were £498,000,000—an adverse balance of £34o,000,000—which is £64,000,000 more than in the corresponding period of last year. Therefore, on the basis of the last ten months, the excess of imports is running at an annual rate of £408,000,000—and, comparing it with other years in which a heavy adverse balance has caused us anxiety, we find that in 1931 conditions were similar in so far that the financial effect of an unbalanced trade position was veiled by the foreign money which had been transferred to this country for safety. In that year the excess of imports was under £407,0oo,o03— or just a little less than the figure to which the adverse balance threatens to attain in the current year.

The redressing of the adverse balance was one of the tasks to which the National Government directed its energies in 193r, and a notable improvement was brought about within the next few years despite trade depression, so that the nation with the help of its invisible exports was again living within its 1.1cans. But, today, making every allowance for the growth in invisible exports through better shipping freights and better returns from overseas investments, it seems inevitable that this year will close with a deficit in our balance of overseas payments. That is not a happy prospect and yet there seems to be a singular complacency regarding it. Too great a degree of activity in internal trade in default of a commensurate expansion of exports would be a dangerous develop- ment, but every assistance should be given to our manufacturers and exporters in their efforts to stimulate our export trade, although it seems unlikely that exports under present conditions can rise sufficiently. The expansion in imports began with the improvement in internal conditions, and when the necessary heavy demand for raw materials, arising from the rearmament programme, is added, the position, I feel, calls for caution. The nation cannot be told too plainly that security against aggression necessitates sacrifices and that such sacrifices can be advantageously made by saving instead of spending money. The resultant contraction of personal expenditure would reduce unnecessary imports and contribute to the restoration of a favourable balance in the national economy as regards overseas payments.

THANKS TO OFFICIALS AND STAFF.

I desire once again to express to Mr. Whyte, the General Manager, the directors' appreciation of his unfailing energy and skill which have contributed so largely to another successful year's working.

The sincere thanks of the directors are also due to the Assistant General Manager, and to the officials and staff of the bank at the Head Office, London, Glasgow and Dundee Offices, and the Branches, for the ungrudging and loyal services they have rendered throughout the past year.

APPROVAL OF ACCOUNTS—DIVIDEND.

I now beg to propose that the report, containing a statement of the accounts and balance-sheet, be approved, and that out of the profits of the year a dividend at the rate of 17 per cent. per annum for the half-year, under deduction of tax, be declared in conformity therewith. The report was approved, and the governor, deputy-governor, extraordinary directors, and the retiring ordinary director were re-elected and auditors were reappointed for the ensuing year.