Reserve Bank of Australia Annual Report – 1962 Departmental Activities

FOREIGN EXCHANGE OPERATIONS

In 1961/62 the Reserve Bank's dealings in sterling with Australian banks amounted to £Eng.249 million, compared with £Eng.299 million in the previous year. These transactions were effected under the arrangements for the mobilization of foreign exchange whereby banks settle with the Reserve Bank at regular intervals for the English currency equivalent of their net receipts or payments in all foreign currencies except U.S. and Canadian dollars.

During the year, spot and forward dealings with banks in U.S. and Canadian dollars in the Bank's special market for these currencies amounted to the equivalent of U.S. $510 million, compared with U.S. $417 million in 1960/61 and U.S. $291 million in 1959/60. The significant increase in dollar dealings since 1959/60 reflects in part the switch from sterling to dollar financing by Japan of purchases of Australian wool.

Foreign currency sales to Commonwealth and State Governments during the year amounted to the equivalent of £Eng.92 million. Foreign currencies purchased from governments during 1961/62 included proceeds of loans raised by the Commonwealth in U.S.A. and the Netherlands. The Bank also arranged the foreign currency deliveries associated with the repurchase of Australia's April, 1961 drawing from the International Monetary Fund. The currencies delivered were Canadian dollars (equivalent of U.S. $10 million), French francs (equivalent of U.S. $15 million), Deutsche-marks (equivalent of U.S. $35 million), Italian lire (equivalent of U.S. $10 million), Netherlands guilders (equivalent of U.S. $10 million) and U.S. $95 million.

On six occasions during the year technical adjustments were made to the rates of exchange at which banks may purchase English currency bills. These adjustments took into account movements in interest rates in the London money market following changes in Bank Rate in the United Kingdom. A further adjustment was made to the after sight buying rates of exchange Australia on London as a result of the abolition by the United Kingdom Government of “ad valorem” stamp duty on bills of exchange.

With the freer convertibility and growing importance to Australia of a number of world currencies, the Bank considered it desirable to widen its agency arrangements and new accounts were opened with central banks in several countries. The Bank values its closer associations with these institutions and the opportunities they will provide to develop a better understanding of the foreign exchange problems associated with international trade and payments.

NOTE ISSUE DEPARTMENT

Notes in circulation rose by a net £8 million during 1961/62, taking the total amount in circulation at 30th June, 1962, to £424 million. The increase of £8 million contrasted with a fall of £3 million in the previous year and reflected the higher demand for notes arising from the general improvement in economic conditions.

Note Circulation

Note Printing Branch

Details of the major items of security printing produced at the Bank's Note Printing Branch during 1961/62 are set out below.

During the year, the Note Printing Branch completed the installation of machinery which will enable the production in Australia for the first time of multi-colour photogravure postage stamps.

RURAL CREDITS DEPARTMENT

Advances made in connection with the Australian wheat crop were again the major influence on the level of the Department's operations during the year. Outstanding advances reached a peak of £113 million at the end of February, 1962. This level was £9 million lower than the 1960/61 peak mainly because wheat and barley production was less than the record crops of 1960/61. The wheat crop was 246 million bushels; it had been 274 million bushels in 1960/61 and 199 million in 1959/60. Wheat exports included substantial quantities sold to China on deferred payment terms. Barley production was 39 million bushels against 68 million bushels in 1960/61 and 34 million in 1959/60.

Advances to the dairy industry reached a higher peak than in recent years as a result of an increase in production of both butter and cheese.

By 30th June, outstanding advances had fallen to £59 million, compared with £82 million at 30th June, 1961.

Profits for the year amounting to £469,449 were distributed, in accordance with Section 63 of the Reserve Bank Act, in equal proportions to the Department's Reserve Fund and the Rural Credits Development Fund.

Grants totalling £216,578 were made from the Rural Credits Development Fund to assist organisations engaged in research and extension work for the promotion of primary production. These included universities, research institutes and committees and junior farmer movements. Projects supported covered a wide field and included research into new rust-resistant wheat varieties, silviculture, fruit fly, soil fertility, cattle genetics, poultry husbandry, cattle ticks, sheep and cattle physiology, irrigation engineering, and studies of indigenous cash cropping and land settlement in the Territory of Papua and New Guinea.

Grants from the Development Fund since its inception in 1925 now total almost £1.7 million.

SPECIAL ACTIVITIES

Economic research

The universities have received further support from the Bank for post-graduate research into economic and financial matters bearing on the Australian economy. Grants were provided during 1961/62 for continuance of projects commenced earlier and for some interesting new projects, including studies of the Australian labour market, the economics of decentralisation and the Australian propensity to save.

As part of the action being taken to mark the fiftieth anniversary on 15th July, 1962, of the establishment of the Commonwealth Bank and, having in mind a gesture of service to the community and a contribution towards meeting the shortage of academic and research staff, two “Reserve Bank” post-graduate scholarships will be awarded in the Institute of Advanced Studies and the School of General Studies in the Australian National University and at each of the other Australian universities. It is expected that the first of these will be taken up in the academic year 1963.

Rural Liaison Service

The Rural Liaison Service continued its studies of commodity markets and other rural matters. The Service's regular publications were again supplied to banks as well as a number of special reports on specific commodities and answers to enquiries by banks. The tenth conference organised by the Service was held at Rockhampton and was attended by delegates from banks and specialists from various authorities to discuss the beef cattle industry in Queensland. The Service completed and distributed to banks valuation information for 36 shires in New South Wales and for all municipalities in Tasmania.

Territory of Papua and New Guinea

The Bank is continuing with plans to assist in the education of the people of the Territory of Papua and New Guinea in the fields of money, savings, banking and credit. This work is being done in collaboration with the Department of Territories, the Territory Administration and trading and savings banks represented in the Territory. The staff of our special officer concerned with monetary development stationed at Port Moresby has been increased, one of the additional officers being a New Guinean from the Rabaul area.

The first of a series of educational booklets has been distributed. This booklet, entitled “Your Money”, appears to have filled a need and further printing has become necessary. Editions have been printed in English, Police Motu and Pidgin English and translations into other languages may become necessary. The other booklets in the series will be published at suitable intervals.

The Bank has also made arrangements for the introduction of Savings and Loan Societies in the Territory following an enabling Ordinance passed at the September, 1961 meeting of the Territory Legislative Council. These societies will be formed among groups of people with a common bond of interest and members, in effect, pool their savings so that loans can be made from the pool for purposes of economic advancement. They should have, also, an educational value in the use of credit. This work has involved the printing of explanatory booklets for the public generally—again in English, Police Motu and Pidgin English—and also a full Manual of Instructions (including accounting and auditing) for officers of the societies. Training of Papuans and New Guineans to conduct these societies is being undertaken and the first society has been formed.

The Bank has given to a New Guinean a scholarship which is enabling him to study for a degree in economics at the University of Sydney. Two other students from the Territory (making four in all) have now been brought to Brisbane for additional education, leading from Junior Certificate to Senior Certificate standard, and they seem to be making satisfactory progress. It is intended that the number of people being given higher education be built up as part of the plan of having an indigenous banking staff in the Territory.

There has been a continuance of assistance to the Territory Administration in its programme for the flotation of local loans for the development of the Territory. The Inscribed Stock Registry for management of these loans is conducted by the Bank at its Port Moresby Branch.

Automation in banking

The close liaison already established with oversea institutions experienced in automatic cheque handling techniques, was strengthened during the year. Valuable first-hand experience was gained by visits overseas of senior officers of the Bank engaged in the systems and mechanisation fields.

On the local scene, further experience in data handling techniques was obtained through the continued extension of the use of the Bank's punched card equipment. In addition, through its representation on inter-bank technical committees, the Bank participated in the detailed investigations and discussions in connection with a common machine language for cheque processing in Australia.

PREMISES

Construction of the Bank's new Head Office building commenced in September, 1961, on a site fronting Martin Place, Macquarie and Phillip Streets, Sydney. The Bank expects to occupy the building early in 1964.

An open competition was held during the year for sculpture and other decorative features to enhance the building, and the authors of the designs awarded first prizes have been commissioned to execute their works. The three features are a 25 feet high free standing sculptural piece for the Martin Place arcade, a wall enrichment in the main entrance foyer and a formal garden on the Macquarie Street frontage.

A contract was entered into in February, 1962, for the construction of the first stage of the building to house the Melbourne branch of the Bank on the corner of Collins and Exhibition Streets. It is planned that the second stage should commence immediately on completion of the first and this building also should be available for occupation early in 1964. The completed building will consist of three basement levels for vaults and bulk cash handling, a ground floor entrance lobby and service area and 15 upper floors rising to a height of 220 feet above street level.

Planning is now well advanced for a multi-storeyed building for the Adelaide office of the Bank, on the corner of Victoria Square and Flinders Street, and it is expected tenders will be called in the first half of 1963.

In December, 1961, architects registered and domiciled in Australia were invited to submit entries in a competition for the design of a building to be erected for the Bank in Canberra, on the corner of London Circuit and the open court leading to the Supreme Court Building. Over 130 entries were received and, in terms of the conditions of the competition, the winning architects are being employed as the architects for the project.

INTERNATIONAL LIAISON

It is the practice for central bankers to maintain direct personal relationships with each other on questions relating to banking facilities available for transactions between their countries and for discussion of economic and financial matters of mutual interest. The Governor, Deputy Governor and several senior officers visited central banks in Europe, North America, Africa and Asia during the year, and reciprocal visits to Australia were paid by a number of leading central bankers.

Opportunities were taken for the interchange of staff with other central banks and the Bank participated in the fourth SEANZA training course for central banking officers drawn mainly from South-East Asia, New Zealand and Australia, which this year was held in Tokyo.

Mr. W.H. Wilcock is now returning to the Bank after establishing the Central Bank of Malaya and serving for three and a half years as its first Governor. In recognition of his services, Mr. Wilcock had conferred upon him a high Malayan award. Earlier in the year, Mr. G.W. Keep returned after spending three years as the first Deputy Governor of the Central Bank of Nigeria. Several other officers of the Bank are at present seconded to these two central banks. One of these, Mr. J.G. Menzies, formerly Chief Accountant of the Reserve Bank of Australia, has been appointed Deputy Governor of the Central Bank of Malaya.

Mr. J.M. Garland is in his third year as Executive Director for Australia, South Africa and Vietnam of the International Monetary Fund and the International Bank for Reconstruction and Development; he has also been designated to represent New Zealand's interests in these institutions.

STAFF

The Board is most appreciative of the manner in which all members of the staff continue to carry out their duties. Despite the increase in staff numbers during the year, a shortage of staff with experience in certain phases of the Bank's activities still exists and this aftermath of the separation of the Commonwealth group of banking institutions will probably continue for some time. The Bank is endeavouring to meet the position by stepping up its internal staff training programme as well as continuing its participation in executive training courses and expanding the scope of its bursary scheme for officers studying at universities.

Movements among the Bank's senior staff which will take place in the coming months include Mr. W.H. Wilcock to the new position of General Manager, Note Issue Department; Mr. Alister Mutton to Manager for Victoria; Mr. J.B. Wright to Manager, London; Mr. E.S. Eyers to Manager, Investment Department; Mr. H.R. Longmuir to Manager, Banking Department.