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GERMANY'S GOLD. | Gr¡MAN'S GOLD. SIR EDWARD HOLDEN'S INTEREST-I ING REVIEW. The general meeting of the share- holders of the London City and Midland Eank Limited, was held at the Cannon- street Hotel, London, E.C., on Friday, the 29th day of January, 1915, for the purpose of receiving the report and balance sheet, declaring a dividend, elect- ing directors and auditors, and other ordinary business. The Chairman (Sir Edward H. Holden, Bart.) said we had seen and dis- t-'tseed the steady accumulation of gold in Germany, but we did not know that these precautionary measures were in anticipation of a struggle which 1Po;s so soon to take place and which was to shake the credit of all nations. Participation in this conflict by Great Britain was precipitated by the arbi- trary action of Germany in regard to I Belgium, and a state of war has exist I as between ourselves and the German Empire since the night of August 4th. I We declared war on the Dual-Monarchy i bf Austria-Hungary at midnight on; August 12th, and Turkey became in- Folved ae against ourselves on November volved a6 against our3c-lves on ?\?ovem b .?r The armies engaged are representing about half the population of the world, and the other half is suffering in conse- guenee, although in a lesser degree. It is not within my province to touch upon matters of a political or historical! significance, and I must content myself with some observations on the situation from an economic and financial stand- j point. On the ISth of July last, the Dresdner Bank caused a great commotion by selling its securities and by advising its clients to sell their securities. This was recog- nised as the first semi-oiffcial intimation bf a probable European conflagration, and Berlin became apprehensive. War was declared between Austria and Servia on the 28th, people were seized with panic and great runs took place on the- Reich- bank for gold, and on the joint stock banks of Germany for gold or notes. The Tfeichsbnnk lost 10 millions sterling of gold or thereabouts, and to prevent further loss, a measure was passed pro- hibiting the bank from paying any more of its notes in gold. To meet the difficulties of the other banks, the Reichsbank discounted, during the month of August, about 200 millions sterling of bills. Of this amount 117 millions were drawn out in jiotes with which the banks were enabled to meet the runs. They next proceeded to establish war ioan banks, war credit banks and war aid banks all over the country under the patronage of corporations, muni- cipalities and private financiers, and to' make use of the mortgage banks already established. As I have said before at these meetings, the Reichsbank had the right to issue notes to any amount pro- vided it held as cover practically one-third in gold and two-thirds in bills of ex- change. As the Reichsbank was to play an important part in war finance, they were careful to keep down the issue of their notes as much as possible, as they knew that criticism would be directed li'& them The exports of Germany in 1913 amounted to about 500 millions stcriing, and cf this total, the Allies and their Colonies took about 290 millions, leaving a balance of SlY,) millions. What propor- tion of this 300 millions will Germany be able to export? Taking again into con- ti,lel,.itioB that she has neither the ao v-ivntage of the same number of ships, nor 9" the same number of men engaged in her industries. as she had in 1913, and fur- ther that such proportion of those ex- ports which contain imported raw muierial will be incraased in price, I think there can he no doubt that her will tali off to a much greater sr-c^nt that her imports, and that,the bianco will have to be paid in gold. We Voat almost superhuman efforts have i?eu and are being made to increase the I):d in the Reichsbank. The increase has iitbe'rto been at the rate of about H aiillions per week, apparently from cir- r;atton and from other sources. The gold lias now reached about 106 millions sterling. But in order to pay for their imports through Scandinavia and Holland they have already had to export about 5 millions of gold to those countries. You will see .-leariy from what I have said frat the maintenance of the financial position of Germany will depend on the balame of hfr inports over exports being small, and on the increase of gold exceeding or being equal to the export of gold. In my opinion, it is necessary for' us to make up c'n" minds that there will he no cassation of this war on account of lh ? gold position in Germany. at all events within 12 monthr-&nd it may be longer. But, remember, I do not say that there might not be a cw^tion of hostili- tie-, for other reasons. If I might venture an opinion. I should say that the weak- ness will first show itself, if it has not already done so. in Austria and Hungary. We have taken over the Metropolitan Bank dunna: the past rear. The profits of that bank for the first half-year Arø rot included in our year's figures, as those profit? were distributed separately. Bv this amalgamation, our capital was frnertrvsed to practically £ 4,800,000, and car Tpserve fund to ,000.000. When we met last year, our depoeits amounted to about 94 millions sterling: 8n the 30th June last, they were about 95 millions; on the 31st of T, t ly. after ire had absorbed fche figures of the Metropolitan Bank, they were about 108 millions, and on the 31st of December last, they were about 126 millions. Our cash in hand was about 17 millions an 31st of December, 1913; about 1.5 mil- lions on 30th of June last; about J7! mil. lions at the end of July; and about 33 millions on 31st of December last. I have explained to you that a lose of profit has occurred in consequence of the large increase in our deposits and the large cash balance vhich we have had to keep. We entered into an arrangement where- by we undertook to subscribe about 10 millions sterling to the War Loan. Under oidinary eircum,-tau(,.tv we should never have dreamt of taking such a large amount, but under the extraordinary cir- cumstances of the war, it was our duty, as it is the duty of everyone, to show patrioti-sm by making sacrifices. True, it will increase our profits, but we always contend that- profits are not of the fiT-A importance in the administration of a bank. In speaking of patriotism, I wish to say here that about 1,100 of onr stiaff have joined one or other of His Majesty's Forces, and some are already fighting for ns at the froiwt. This depletion of the rtaff is a great sac-rifice for the bank to have ma. sacrifice in which the re- maining members of our staff have shared. The cheerful and willing way in which they have foregone their holidaya and taken up extra duties has been paiifcLcu- larly gratifying, and I take this oppor- tunity of expressing our appreciation ni their loyalty. Previous to the war, we had tried the experiment of taking girls into the establishment to do specific work. Thitf experiment has been highly success- ful, and we have now over 350 employed In various parts of our system. They are nnder the control of a very clever lady juparintendent, and one must pa.y a high tompliment to her for the able maoncr In which she hfvs selected them and or. ganised this section cf the «nte.bH«hon«Qt. Our net profits for the year tave been El.liti. qoq The dividend paid for the rear at the rate of 18 per cent per »nmi: i.e., the same rate as last year, Amounted fee £ 785.794. kswsiasc a after paying income-tax for the half-year, ending June, 1914, of £ 293,292. We regret I we could not see our way to continue pay- j ing the income tax, as it is quite evident I j thia itely will ultimately assume very large proportions. We considered it cur duty to provide the usual X'20,000 for the Staff Pension Fund, and we have thought it the wiser py to carry forward the < remainder to the next account. This. with the balance brought forward, amounts to about £ 421,285. The usual complimentary resolutions to the chairman, board of directors, managers and staff, having been passed, the meeting terminated with a vote of thanks to Sir Edward Holden for his conduct in the chair that day.















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