The End - of the Bank Meetings

Finance

OPTIMISM TEMPERED WITH CAUTION.

WITH the addresses delivered during the past week to their shareholders by the Chairmen of the National Provincial, Williams Deacon's and Lloyds Bank, the annual series of bank meetings has now concluded and it is possible to consider the general consensus of views expressed by our leading bankers on the outlook. I consider that the outstanding feature of the address delivered to shareholders of the National Provincial Bank by the Chairman, Mr. Colin Campbell, was the important connexion which he made between the need for expanding our exports and the problem of unemploy- ment, particularly in the Special Areas. The problem is a difficult one and it has been increased in recent years not merely by trade depression as a whole, but by the tendency for certain industries ,to move from the North to the Midlands or even to the South of England.

Quite rightly, however, Mr. Campbell dislikes the notion that the condition of those affected by the decline in international trade should be ameliorated by allowing the inhabitants of former industrial areas to drift into other areas which may happen to be busy on domestic orders. Such drifting he regards as both wasteful and unsympathetic.

THE SPECIAL AREAS.

" If," said Mr. Campbell, " such a policy were adopted, it would create a wilderness where there was once a hive of industry ; it would involve the uprooting of people who love their homes and neighbourhoods and transferring them to places where everything would be strange and a good deal unpleasant. Mr. Campbell believes that an expansion in our export trade gives. the best promise of increased employment to our workpeople and, for the most part, increased employment in those areas in which they have worked for generations past.

AN UNNECESSARY FEAR.

With regard to any strain upon credit resources involved by increasing trade activity and the rise in commodity prices, Mr. Campbell is evidently in no way apprehensive with regard to the future. He suggested that in present conditions the power of our monetary authorities to influence the price of money was almost unlimited, and that it had been clearly shown that there was a determination to use it on the side of maintaining an adequate supply of credit. Even as regards the rise in the prices of commodities, Mr. Campbell reminds us that such prices are still, in most cases, well below the levels of 1928 and, in view of the great fall which at one time took place, he was disposed to regard the present recovery as " a correction of an influence which produced incalculable distress, not only among the agricultural and mineral workers whom it affected most directly, but also among the manufacturers—both employers and workers—in the older countries which found so many of their customers impoverished and so had to curtail output and suffer the miseries of unem- ployment."

THE COTTON INDUSTRY.

As might have been expected from the district in which the bank's operations are carried on, Mr. Gerard Powys Dewhurst, in addressing the shareholders of Williams Deacon's Bank, gave chief attention to the cotton situation and the problems affecting that par- ticular industry. In common with other bankers directly concerned with business in Lancashire, Mr. Dewhurst confirmed the reports of unmistakable, if slow, recovery in the cotton industry, mentioning, among other causes of that improvement, the Cotton Spinning Industry Act for dealing with Redundant Machinery, which, although and the trade has also benefited by increased pur- chasing power within the country; the net result has been main- tained, a psychological effect in restoring confidence, only recently brought into operation, has had, he main- that spinners and manufacturers have had orders filled (Continued on page 246.)

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(Continued from page 244.) for _some. time ahead at prices which-, for the first time for many years, bear some relation to costs.

THE • PROBLEM OF INDIA.: - At the same time, the Chairman of Williams Deacon's Bank had to report great slowness of exports of piece goods to respond to improved conditions and to the large exports of raw cotton, though just latterly some increase has been noticeable in the volume exported to the Dominions and Colonies. Mr. Dewhurst, however, was obviously much concerned with the falling off in our trade with India. By a vote of the Legislative Assembly of India the Ottawa Agreement with the United Kingdom has been denounced, and the whole question of the commercial relations between India and Great Britain is due to come up shortly for revision. Concerning, therefore, the matter of some fresh trade agreement with India, Mr. Dewhurst expressed the hope that with the removal of all political considerations from discussion, any differences of opinion may be settled from a purely commercial point of view and a policy of mutual concession be adopted.

VIEWS OF LORD WARDINGTON.

Perhaps the most restrained views with regard to the outlook were contained in the able address of Loid Wardington to the shareholders of Lloyds Bank. The Chairman of that Institution made full recognition of the satisfactory conditions of Home trade during the past year, but he referred to some previous occasions when domestic, as distinct from international, trade has been an outstanding feature of the situation, recalling, for example, the fact that at the end of 1919 and the be- ginning of 1920 we were enjoying a premature post-War boom with active industry and high prices. At that time, because it was clear to the authorities that activity was degenerating into a mere boom, higher money rates were imposed, with the result that the policy evoked severe criticism from traders. Looking back, however, said Lord Wardington, at those events, " the question now arises whether the fault was not that credit was restricted but that it was not restricted soon enough."

POTENTIAL LENDING POWER.

At the same time, Lord Wardington fully admitted that conditions today were not the same as in 1919-20, and by way of contrast he mentioned that in 1920 banking overdrafts were over 47 per cent. of the deposits, while in 1929 advances were 54.2 per cent. of deposits, whereas at the end of last year the percentage was only 38. The much smaller percentage of advances to deposits reveals in fact a large potential increase of lending capacity.

Not the least interesting part of Lord Wardington's speech was concerned with an analysis of loans and advances, and it was an analysis not merely of the loans and advances of Lloyds Bank, but of all the Clearing banks, the figures being those of October 31st last as compared with some seven years previously. This showed that the total advances last year of the Clearing Banks amounted to approximately /869,000,000, a decrease of £118,000,000 compared with seven years ago. The only increases occurred under the headings of building trades and amusements, clubs, churches, &c. The outstanding feature was the grelit reduction in loans to industry. • One further point in Lord Wardington's speech to which I would like to refer was his reference to bankers' responsi- bilities in the matter of" prospectuses of capital issues on which the name of the banker appears. The Chairman of Lloyds Bank expressed the opinion that the banks in general recognise their responsibility to the public by the fact that they criticise the contents of a prospectus appealing for public subscriptions on which they are asked to allow their name to appear. " I know," he said, " that this bank goes out of its way, so to speak, to be particularly careful in this respect. It is always possible for an ignorant member of the public to -conclude if he sees the names of a respectable bank and brokers on 'a (Continued -in page 248.) -

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(Continued from page 246.) - - prospectus that they-are virtual guarantees of the success of the enterprise. No one, of course, who is familiar with business would ever thaw this conclusion, and he knows that a bank's name on a prospectus merely indicates that the banker has made every enquiry into its general bona fides, and that he is only acting on behalf of the issuing house to receive subscriptions.