BANK OF NEW ZEALAND.

Auckland Star, Volume XIX, Issue 240, 11 October 1888, Page 8

BANK OF NEW ZEALAND.

SPECIAL MEETING.

A special, general meeting of the shareholders in the Bank of New Zealand wa*> held at the banking house at 2 o'clock this afternoon. There was a large attendance of shareholders, and the President, Mr George Buckley, occupied the chair. Amongst those present' were Mr Justice Gillie*. Sir F. Whitaker, J. B. Whyte, M.H.IL, X Oignan, M.L.C., W. Aibken, At Boardinan, W. S. Wilson, Jas. Russell. F. Cherry, J. H. Upton, E. Hesketh, IL C. Carr, F.« L. Prime, j&cmv P. Mason and R. Sommerville, J. 3f*w«i!att, J. L. Wilson* J. Batger, H. N. Osafcrnd/'-L GrahaWi^T. Buddie, Fry, F. Battle/, G> P. Pierce, J. B. Russell, F. 0!. iMngtoo. Murdoch, Alexander, L. 1). Bey. D. Eh nice, McCullough, .1. M. 'iteL&efUoii, 'T-, Peacock, .J.H.R., L«sher, E, F, Anderson, Professor Thomas, Major G-eorge, S, Browning, Esath, Thorne, J. V. Bcwtbcm, Captain Brauud, J. M. Clark, Pi-.. Campbell, A. IL Taylor, D. M. Scott, T Ching, W. Johnston, J. Watson, W. fjater, J. T. Julian, O'Neill, J. C. WilHaawon, A. Bull, J. Winks, S. E. Hughes, T, J, Esaro, T. Drummond, J..1. Garliok. The general manager (Mr Murray) read t&eadYertittemenb convening bhe meeting, and ateo the minutes of last meeting, which latter were confirmed.

The Chairman eaid that it had been anaomsced bo him that the requisite number of shares was represented, so thab they ooold proceed to business. Some of those present wished to remark on the Commibtet's report. A convenient opportunity would occur when he had moved tlie second resolution. The firsb reßOlubion was merely confirming one passed at bhe last meeting, and he would move its adoption. It was as follows:— ......

■ h That the Resolution passed at thoSpectal General Meeting of Proprietors held onl the third day of October last, altering Clause 13 ot us Deed of Settlement, be, and the same is, hereby confirmed.

MrC. E. Button seconded the resolution which was put and carried without a dissentient. The Chairman then proceeded to say that the next resolution was of much more importance. It would commit the shareholders to the writing off of no less than £3 per share of their capital. Upon tt he would offer some remarks. And first he would ?ay that the Committee consider their work — unless their statements were seriously impugned, which he feared was not likely, because their main conclusion wasthat£3por share of the capital of the bank was lost—was only too accurate. It might be necessary for him to say more on this head before the meeting terminated. What he bad now to say was to be considered rather ia toe UgM °* wpteoawns

from the chair, regarding the motion he would presently put, than as any fresh deliverance from the Committee. It had been suggesbed bhab bhe Committee had undervalued the securities in favour of the future ab the expense of old shareholders —and it had, he believed, been suggested on the other hand that they had not cut deep enough. Such conflicting suggestions neutralised each other. The Committee did not, in fact, themselves value ab all in the first instance. They obtained independent valuations, and bhey carefully reviewed these, and they had certified that in their opinion they might be accepted with confidence, with the result already stated. There was accordingly really no alternative but to write off the lost capital, because otheiwise no dividends could be paid for years, and it was, he believed, the intention of the Board to declare a dividend ab the half-yearly meeting to be held on the 22nd. The Chairman then moved the second resolution :—

2, That £3 per share of the present paid-up Capital of the Bank be, and the same is. hereby cancelled, Buch Capital having been lost or being unrepresented by available Assets and that henceforth dividends shall be paid on such shares as representing £7 each instead of £10 each, the original amount thereof. But such reduction shall not interfere with or in any way alter the liability of Shareholders to contribute a further sum of £10 as provided by the Banks Act and Deed of Settlement in the event of the Assets of the Corporation being insufficient to meet its engagements.

Mr C. E. Button seconded this resolution also.

Mr Dingle, 0/ Taranaki, asked if this was the proper time to speak to the resolution, and being answered in the affirmative, proceeded to address the meeting. They were all, he said — the judge and the lawyers, and tho merchants and the farmers — they were all the shareholders in the Bank of New Zealand. They were in fact the Bank of New Zealand. They would have seen from the report of the Committee that the enormous sums of interest that had been paid to the shareholders were more than double the capital ,of the Bank. That was light enough. So ib was .with the £15 shareholders. They had no right to grumble. Now the directors had buoyed them up in such glaring views that the public had been allured, and had bought the Bank of New Zealand shares to an enormous price. They had been led away by the directors. He believed himself that the Bank was all right, one of the bestpro per ties that could be invested in. The directors said " You have been paid so and so."' If he remembered aright, there had been onethird of the shares received which were allotted at £17. Since that time till the present, they had received fifteen per cent., and then they had come to the present when they did not know what. Now, he considered that the shares he had bought had been paying the interest out of his own capital. Now the question came to this—They paid £1.7 per share for the surplus shares, and now they wanted £3 more, and that would be £20 for those shares. There was £20 to pay for their shares. If the shareholders paid £3 they would have a dividend ; if they did not they would have no dividend at all. They would go on year after year till they would be in their graves, he supposed, and probably they would be well got rid of. Ho did not believe in tho report. He had no confidence in the Bank, and he never would have confidence in it again. He had been in New Zealand nearly half a century, and he intended to speak his mind to these gentlemen upon these topics. He was going to put a question, and he hoped it would be answered. They need nob be afraid to answer ; if they could not finish to-day they could have another day. Let them have some debate on these questions, that was his opinion. It was all very well for two or three to meet together; one proposed and another seconded, and thus the Bank of New Zealand was going to destruction, and bhe shareholders, they had not looked after their business. (Hear, hear.) What he was going to ask was this : At the last meeting they were told that the capital was one million and the reserve fund half -a - million. Well, then, he came to the property tax paid on the buildings, etc. The property tax on the concern was £3.737 Is 3d. How kindly they put down the ls 3d. (Laughter.) W Tas not ls 3d a big thing? my goodness ! (Laeghter). He looked at the matter in this way. During the twelve months past, instead of £500,000 ie was £650,000. Well, he took it from the present time for a period of four years, and •he brought ib to three millions, or say two millions total. That was according to the calculations of tho directors' two millions total. Now the question he was going to ask was this, lb was about the property tax. The General Government would claim for two millions. He would have the shareholders understand that for the last four years the General Government had on the strength of the printed forms issued to everyone, really been paid property tax for all this enormous sum of money. Now, of course, there was only three - quarters of a million. He could nob understand how any institution could live and prosper while it paid such enormous taxation. All thee premises they found were overtaxed. Kow what did bhey rind occurred when a man discovered, bhab he was over-taxed ? There had to be a repeal. These buildings were not worth as much as they were ten or fifteen years ago. ' Probably they were worth a quarter less or more than tliat. What he wanted to know was whether it was actual truth thab bhey had'beeijja t 4»g property tax for all these enormous .*mns of money. He did nob mean to say bhab bhe direcbors were rogues (laughter), bub he meanb to gay that ..the directors, and nob only %_&; ..direcbors bub also the managers, ought to look like detectives after the management of the Bank. As for figures, well figures were nothing. It was management thoy wanted; and they wanted to know whether it was worth while to lend So and So money. They -wanted to get men with heads and brains in the Bank of New Zealand; nob men -\yith flimsy and dwarfed abilities. He had a great deal more to say yet, only he needed a little time. Although he had bee-i a public man he was all a-shake, but he would get over that in about half-an-hour if he could only speak that long. He knew that was lost, but lost like wator that had been spilled upon the ground und could not be gathered up again.. But ib wan the duty of the shareholders to now strengthen the hands of the directors for the future. He would tell them how tho thing* had been managed at New Plymouth. There they had two banks. The first was good 'enough for New- Plymouth for years to come, but down in tho centre of the town there were three banns, the Colonial, the Bank of New South Wales and the National Bank. Well, they moved away down town to get amongst them. Yes, he could tell them about these things as he had come from the South, and he thought It would do them good. Well bhey went and bought a piece of land off a Mr Frederick Carrington. They paid him £600, and set bo work and pulled down the old building.? that were on the ground. The place would not have fetched £200 at auction, he believed. Then they builb a place at a cost of £15,000. He was coming on to the retrenchment now. That was'how they did it down there. Then the old bank was turned into a house for the new manager. What did they think of that ? They actually took the beautiful bank and turned it into a dwelling-house for the. manager. . Then there was painting and deeoratin c and after that'balls, dancing and singing and he was veiy friendly with all tho

big shareholders. Well, that gentleman was a very big man, and he gob too big for his boots. He was what they called a lah-de-dah. (Laughter.) He told them this jusb to show that there was plenty of room for retrenchment. That ' bank manager was just like a young horse that had gob too much oats , he was a little fresh. He got so big thab he could nob. see a little shareholder. He held that, the shareholders could nob afford such meti for direcbors and managers He knew a poor widow -tyhose husband had died, and all bhey were lefb had been invented in the bank by the trustees so as to give them a living, and now they were compelled to trust to their friends for a living, while those people who had wasted their money were living upon tho fat of the land, and what was more, they were couiidered respectable. Their officials were men who had learned bo read and write and to figure. They were splendid hands ab figures, but they had falsified figures for the shareholders. They wouldn't put him down for a bit. He was red hot now. He had lost a bit of money by this, he could tell them. They were practical men in figures, but not practical men in lending. He believed that they should have in all the banks in the colonies men who knew the value of land, of cattle, and of property. If the Bank of New Zealand had had such men she would now be worth £3,000,000. When lending the managrfrs should have paid the two guineas or the five guineas to practical men to report before they invested. They went on Govern ment valuation. He asked if that waa a fair test. He knew men who were at very low water mark, and they had gone with their property to the Bank, and they had said, " Look ab our security— Government valuation;" and now these securities were not worth a half— not worth a quarter of the Government valuation. Ho was a little bit of a money lender himself, but he went on no Government valuations—you had to get up early in the morning to catch him. If they had got the right men the bank would now have been worth its £3,000,000. He would like to know where the £600,000 had gone to. Someone had been living on the fat of the land. He had paid for his dividend and had no reason to thank anyone for it. " Oh, yea, they were to have a great washing today,''so a friend had said to him. Yes they wanted to begin again with a clean sheet. It was to be done"' in the interest of the public. They would say the " ayes " had it, but he had seen too much of this ayes having it. Thoy had lent their money on leaseholds. He had received a circular to go in with the Loan and Mercantile. He was of opinion thab bhe Loan and Mercanbile had taken all the best deeda — all the best property — they had taken the wheat and left tho chaff for the Bank of New Zealand. He knew he spoke very loud, but ib would unfc bo so bad when he had cooled down. He could talk like a parson when he got up, and he did not care for all the parsons in the place. If he had done any dirty tricks like what had been done to the shareholders of the Bank of New Zealand he would say to take him out into the street, erect a casble, and hang him up. The Bank of New Zealand had had the very best of the times, and the very best of the loans. If they went into any of the factories connected with the Bank of New Zealand — into the Frozen Meat Companies or any of 'them — they would see that managemeut was everything. Men who had no more brains than sparrows had been put .into positions. The Bank of New Zealand should have competed so in the past that they would have been able to bear tho brunt of this time. He did not know if he had paid enough (cries No ! No ! Go on !) Ho could talk from then until to-morrow about the Bank of New Zealand. Did they know that the Bank of New Zealand had Been in a general way helping the einall farmers with email loans of £200, or £300, br £600—men who were as good and whose property was as good as the Bank of England ? And all abng tho coast they had been putting the screw on them, 6aying that they must draw their their money in. They could nob get it from the big onei, and they preferred to take it from the little ones—they would fall upon the little ones because^ the big ones .would not ps-y. Was that for the prosperity of the country? was ib for the prosperity of the Bank? Then they had driven away . good securities —men who had come and told him of it-and these men had gone to the other banks—the Bank of New South Wales and the others — and there was plenty of room for retrenchment and room for improvement. It was their place he held to strengthen the hands of the new directors—to do everything in their power to help thorn. He trusted he had'said something, though he could always give more about the Bank of New Zealand.

Mr Francis Cherry eaid that there to be an idea in Auckland and other cities that' the large shareholders should have all the say in the management of these institutions. He thought, they should have a good share in it. He knew that there were shareholders to whom the losing of £100 meant quite as much as the losing of £1,000 or more did to others. He thought that there were some' things that the Committee had not told them that they should have definite information about. They should be informed what were the securities and what they were worth. They had been kept in the dark boo long aboub bhese things. They had been led, as it were, to the brink of a precipice, and now blindfold bhey were to be asked to jump over. _He d,id not cay lie hud"'no" confidence - in the present directors. Thero were good and practical men among them, but ho was not prepared to take in all they said without knowing the reason why. He hftd shown Jiis confidence'in bhepe' dii.iqtdra in' "4 pscti.£l manner—not by passing fulsome votes of thanks, etc., but by sticking to his interest in tho Bank. He was not prepared to swallow all that was put before him by them. They should be told something more about the losses they had suffered— losses in Sydney, Auckland and elsewhere. With respect to another itemin the report — and now he referred to the £160,000 amongst the directors—the shareholders ought to know something more about that. Even if he stood alone, lie would not 6wallow that. He would propose, as an amendment, "That before agreeing; to the proposal to write off the £3 per share, equal to 46"1 per cent, of the actual cash paid into tho Bank by the shareholders, it is desirable that further and more full information should be supplied." He would deal with that ques-. tionnow. For shares that were only nominally worth £10, they had paid a premium of £3 per 3hare, so bhab bhey had really paid £13 on each of bhese shares. The average paymenb, therefore,; cosbbhem £13 per share, and yet they were asked bo wipe out £3 off the £10, so that oub of bhe £13 they would only stand at £7. That newshareholdersshouldbeaskedbocomeinat par was monstrous. It was not right that this should be allowed unless things were much worse than they anticipated. Tho Bank had had a capital chance from the beginning, and had made money right and left from the beginning; and, in fact, if :.b had not made" money largely then, it must have been absurdly managed, for.every thing made money in those days. The Bank would have been prosperous now if they had. had as directors respectable, honest men of good judgment. Bub if they were lending money at the prices that were going two years ago, or anything near that, they were' acting recklessly, and he claimed to know something of ■ the matter, because he had some experience from his connection with another local institution, If they had been doing as he

said, they were acting worse than recklessly ; they were wasting and squandering all they bad got. With regard to that question ol loss, two years ago they had £260,000 reserved, besides their capital. As the last gentleman had told them, it had been customary to write off ten per cent, per annum on the Bank furniture, and this had been done for year after year, so thab it represented a'much larger sum in value. He wished tosayanother thing with respecb to the management. They had been assured again and again from bhe directors' table thab the Bank was nob djing a risky business, bub rabher a safe one. And bins was whab they called safe I Nearly a million pounds had been lost. Tho directors had achieved what had never been achieved before on this side of the Line. There was not a ring on all thiß side of the Line that had managed to lose a million as bhey had done. He hoped thab those gentlemen who had been backing the directors up and crushing anybody who dared to express an opinion, would propose a vote of thanks to the directors for what they had done. They had made themselves famous. The directors ought to give them a balance-sheet showing what things were. The writing off of capital was very serious, but it would not be so much so if they were not inviting fresh capital. If in writing sharesdown to £7 they askedothers to come in ab £10 ib was nob fair. He proposed bhe amendment he had read, and left it to anyone who choae to second it. He had at least done hie duty. Mr Dingle : I shall not propose any thing. I shall leave it to those who are here. Mr Caleb Wallis waa the next speaker. He thought they had a right bo canvas* nob only bhe acbions of bhe directors, bub also of bhoso who had assisted them. There were points that ought to be brought before that meeting that had nob been generally nobed. In the first place, thoy had been told by a report—and a graver charge could not be brought against honourable men — that the business had been carried on so utterly recklessly thab they had incurred the gravest censure even if more specific means should nob be taken. One thing this meoting should know was whether the Committee were sabisliod wibh whab the late directors had done with the £160,000 which bhey had pocketted and squandered. Then, again, if the auditors had looked ab the securities they should have known something of the Btato of the Bank. It seemed that the auditors had merely appended their names to the accounts without a spark of judgment The auditors were the men who stood between the directors and shareholders, and if they found that they had simply come in and signed their names without inquiry, such action called for more serious measures. The position of the shareholders was a vory serious one. They were called upon to give up a good business to a number of now shareholders. Thore was no account of the goodwill. They were supposed to take £7 for shares for which some of them had unfortunately paid as high as £24, although forbunately he did not do so. They were, in a word, to play second fiddle to the new shareholders, and he and others of bhe smaller fellows were nob to know anything more about ib. There wer« those who said bhab those appointed by the shareholders to investigate the accounts had, in tenderness to the directors, overlooked something. If this £160,000 which ib waa said bhe direcbors had quietly put in bheir pockets had gone, bhey ought to know who had bad ib. (Hear, hear.) There were honourable men who were supposed to be honourable cibizena all on the directorate. How were the shareholders to know who had the money ? A voice beside him asked " Who robbed the widow V If thoy went bhtOugh the" lisb of shareholders they would" see many widows — thab was true eisQ«ih. Here' were investment* made forvw. ' support of widows and for other parti.». Jiow, how were the shareholders to know who were able men and who were not 1 In this liquidation proposed—he did nob know whether he was exceeding his right in going into bhis matter now—but he wished to speak with regard to the liquidation which had been recommended—that these bad things should beputinto aaeparabefund. It came in with the proposal to Strike off £3. They should have a separate fund, in order thab bhe thing mighb be kept oub of bhe regular account. How wero they bo know otherwise on which side the balance was going ? , The Chairman: When thab resolution comes on I will explain, and you will get bhe information. Mr vVallis said that they wanted to have a fair and a good stock-taking. They were to join partnership with somebody el*e, and they wanted an honest and honourable stock-taking. They did not want either an overvaluing or undervaluing of bheir estate. The good, will of such an institution was surely worth -. something. He thought bhab before they gave up this greab sum furbher information ehould be obtained, in order to ensure a real stock - taking. He would second Mr Cheny'a amendment, and he would say that before bhe resolution was passed there should be furbher information given wibh regard bo tho real estate. Mr Dingle said there was one other thing which he wished to mention. There was £373,705 la 3d set down—that waa tbe landed property of the Bank. The Commitbee bold them thab about a quarber of a million or aboub a third of a million was gone, and he now asked was it right or fair that bhe new shareholders should come in and receive the benefit of this. They would pay their £10, and the old shareholders, some of whom had paid £20, would ttwii to. go. Mck.. &lsHoupl that the present-shareholders should receive some benefit in proportion with the new shareholders. It would.be his view that they phqukji go back to the £7, '* Th« HMW itjfiuo ought -to ha £7, andiet- them begin,a now bank afresh. The Chairman .said that, with respect to the new issue, the shares would be offered first to the present shareholders, and those nob taken by presenb shareholders would be offered to bhe public at a 10 per cent premium. Mr Dingle : I know bhab, but I don't believe they will take them up. They may be taken up, if we see some jgood directors. Mr F. G. Ewington said that a lady who could, nob be present had given him "some questions to ask. He thought it necessary to say a word on one or two points. There seemed to be a disposition on the part of some speakers to impeach hot only the Committee who had prepared thia report, but thov had also impeached bhe auditors and directors. Now, it was very e?ey to impeach, but it was sometimes very difficult to prove the itti^eachmenb. He thought that bhe Cottimibtoe who prepared bhis report were deserving of bhe thanks of bhe shareholders, and he had moved a vote of thanks bo them at the last meeting. That was the only vote of thanks he. had ever, moved at the meetings of bhis Bank, bub from the way in which Mr Cherry Bmiled, one would have supposed thab he (Mr Ewingbon) had proposed every vote of thanks that had ever been proposed ab bhe half - yearly meetings. (Mr Cherry denied the soft impeachment) Those genblemen who prepared that report must each have bwo hundred shares in the Bank.andaccordingtobhedeedofeetbiemenb, auditors who undertook to ahdit their books were liable to a line of £100. The Chairman : £200 each* ■ Mr Ewington added that the«e gentlemen bad consequently a great deal at Stake, and that they must, in theirotvn interests, have looked carefully into matteiis. Therefore, on the lowest grounds, the shareholders might infer that the Committee had given a fair statement of the condition of the Bank. I. was a question far the meatwjg whether

they could give to the shareholders my better information than that afforded by. the report of the Committee. When bhey signed that bond bhey bound themselves body and boul to those men. They had given them full power, and the Committee had gone fearlessly and carefully into the matter and they (the shareholuers) were bound by that report. Wibh regard to the auditors, well they all knew thab as a rule auditors' reports were a,farce. They simply went through the documents handed to them They knew bhab the auditors had not been over, the hundreds of agencies of the Bank all over bhe colonies. Ib would have been quite impossible for Messrs G. I. Pierce and J. L. Wilson to do tbab if they had taken the whole year for that purpose. Therefor*.bhey : must nob depend sq much upon the auditors' reports as upon bhe returns of the. Inspector's Department. He should 7 be very sorry to' say .. one word againat bhe, direcbors, and ib was their dhfcy to bear in mind a few factß. They all knew of the great wave of depression which had been felb all over bhe world and which justified many.of the losses of the Bank. VVheab was now aboub half the price it had been. Wool was considerably lower bhan ib was some years ago. Rents .had come down also. Jb'our years ago bhe Bank had refused £16 per week for property in Queen-street which was now let for ±"4 12a bd, while another place for which bhey had received £7 10s per week was now let for £1 103. Under such exceptional circumstances it would have been one of the greatest wonders in the world if the direcbors had nob made some mistakes. Bub it would be beiber for bhe shareholders, instead of recriminabing, to see whab bhey could do to make bhings betber in blie fubure. Now the quesbions which a Udy shareholder had put) in his hand bo ask were :—firsb, " Was it a necessary part of the arrangement wibh bhe English cupitaliste, that the old shareholders should submit to a loss of £3 per share ? She bhinhs ib very hard bhab bhey) the new shareholders) should have bhia advanbage. The second! question was,: •« If thesecuiities on which the alleged loss is, made recoups the loss, will the old shareholders have their £3, or any part, of ib re-insbated oub of bbc i-ealisation ot bhe securities."• He bhoughb that if obey could promote the interests of the old shareholders, they should do so. (Applause.) The Chairman said thab with reference to the first question he might say ab once bhab of course in making bhe arrangemenbs ab Home, these parties were made tully aware of the position of bhe Bank just a* bhey were out here. They had had this report before them and were cognisant of all tho facts. They were made aware that £800,000 would have to be written ( off, the whole reserve fund, together with £30,000 of the capital ot the shareholders. The resolution wus made that the original shareholders shall have the right bo pay up, ab some fubure time,-bheir £3 per share. Wibh regard to the second question, he might say thab the assebs would all bo paid inbo one account, and when bhe liquidation was fiually completed all would share alike, whether ib was prolib or loss.

Mr Reader Wood and others spoke at greatlengbh. Tho Chairman, in the course of some remarks, stated that legal proceedings would probably have to be instibubed with reference to bhe transfer of certain shares to bhe London register.

Mr Cherry's amendment was lost by a large majority, and the second resolution was carried on a show of hands, Mr Cherry being bhe only dissentient.

The meebing is sbill proceeding.

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