BANK OF NEW ZEALAND.

Auckland Star, Volume XIX, Issue 241, 12 October 1888, Page 2

BANK OF NEW ZEALAND.

SPECIAL MEETING

We. continue our report of the meeting from yesterday's issue :—

Mr Dingle said fchafc ho thought all that-was.-realised should go to the Reserve Fund. The Chairman said that the object was to keep them distinct. Mr Dingle asked whether the General Government had been paid*the- enormous property tax upon property which the Bank really never possessed. The Chairman said that the Government made the claim, and the Bank could not help but pay it. Mr Dingle expressed his> opinion that ib Was the duty of the shareholders to strengthen the hands of the Committee.

The Chairman remarked bhab while he wished to allow every latitude he-must tell Mr Dingle thifc what he was speaking about was-not referred-to in the resolution..

Mr Dingle : Evidently the money has. been paid:Mr J. M. Clark said thab he intended to vote against Mr Cherry's amondinant, although he- sympathised with a- good deal that he had -aid. He should support: the. motion, and he should' do so because he: thought that the- motion was the best thing that the shareholder* could do. The Gqmmibt.ee- had- said in their report thab £300,000 of ;he capital and-' the- whole- of- cite rose-rye fund musb be wiped off to make thi..B..uk sh&r«s wort_v2os-inthe- £. Suoh being- the-onse, he thought it-would-'hs-wiae.- to act- in. accordance with the-Coiinnit.t.c-,fc'*sugge*bions. and further,• looking- ab the- report- they woulchsee-thab ib was nsoe.ssiU'V". to wipe oft£3 to-«el>tbe-new capital. To- gat n&v* capital "they must give capitalists* eomething that was worth tho piice that \hm a-kedloi'them, Mr-Cherry askodthem to defer passing the lu-oltiuons- until full information as- bo fclio- losses- was laid before the-ahwehoiders. Well; bhe report stated that the losses in the Auckland district, were- aboub £400,000, but did- not give the- amount ofi los*- in- the Southern, districts and Australia. Mw did' not suppose thab tlie shareholders w-n*bfid? to :bave a- balance-sheet showing everything that the Bank had done, together with a list of the. mortgages and probable losses thereon. That would be an action utterly oppose* to ban._- ---■ ing principles,, and: also an injustice- to the>cus-omer_o-,-theßauk.. Ab the- same time he did sym/pathi..e with Mr. Cherry anrhtheremarks of another speaker-with; re? garxh to the elaus&in the-repurfc' where it was stated that the losses through direcbors had. amounted; to £160,000. As, one- critic in- the newspaper, had: said,, the Committee went either too, far- or nob tar enttugb-.. He- did1 think thab bhe Com, nvtteu- ought, bo, specify those; p&r-tic-.dar directors who had obtained the-£-160jCOO;.n.nd- not-, to allow the charge* to-tost;, on-the wltolfe of' them. They might then see whether, fche defence of the-direo tor*- might.- nob show- that* their- ii-ticm was- justi-rif^ ab- the time. Ano-he* th_tfg< Was that, .here Wore v-ery grave- and distiuet charges in the report, luadb in- a w-^l- Clint- V-ioy ■ rested' vq*v.n oUc. dirwt->_-and' __ia«»gem«nt. Cue- ofVxii _iiv __£»»« -to the-- ir.ffii-ii._-ev_- m- Sydney and AdOlautt. where ib said, " that the selection ot irtanafers■"wa»it. each-ease, bo; say the' 1 oftsly mii'ort&uweev" Tharti- implied thai. fche^COm* mittee could*have said mu.h more if tilej? had wished. (Applause.) He' shfmW have- thought that- w»f. quite enough-. He-questioned, in one instance-, whether-the-appointmenfc of-the--manager- in Sydnoy was unfortunate. They wero- nob to sup-pose1-that he-was. in favour of. appointing f-tsfc raen-as managers-* But tbiS he-Would: say,- that before the defalcation--w-ero found out if it had-, been; asked- who: was their aio-sd enterorieing: manager, that- one would: have been pointed out. It was-true that Mfcy had lbst by him, but his-energy and popularity hard- built up a business which* still remained. And-it might _>a thab the returns from thab business- in the- future would make thorn- look upon the- loss-as akind-' ot bonus paid to obtain bu-ines--. How ever,he felt, satisfied that the most that could be said upon that matter was-that the selections-were- m»foi'ttwirete. Hie- would now refer fee another clau-C, blurt one- referring to- the £160.000 lost to dweebs*-! It v/as bhe end of the clause th*. he wished fco speak about. It was-as follows-:—" While eetfrauv transtiet-ron »■ have come'uuder our uotice-civilvng for the -gravest censure, i-f not for mere specific- aebie-H-. The question was, what Were those charges? His-opinion- was that- specific charges ought to be- made (ap'pteue*)- it* these matter, of else- these innuendoes ought fco fee- withdrawn-. Bub he would move no- amendment, ' for he considered that it ousrht to Intro ' heen done at the- meeting when ' the report was presented-. Be believed thab , the suggest*otts of the CchMmiCfc© were- m& ' beat" thrrW t-ha* the* shareri«-Kdev-- coaid- a _••. Mr Reader Wood said thab he- thought ■tha* it was- o¥ilY due- So' t^e IMIB,b*B :of tbe Committee- that something spee'ttfe : should, take, place with regard to tho ! report rather than merely fco put them in a 'formal manner as re-.olutions. He should 'have thought that the proper eeurse to- adopt would be bhab the- reportitself should be adopted by fche shareholders. Ib would- then have been competent for Mr Clark or any other shareholder to have made any amendment which they chose. Now k was quire impossible to • make amendments to clauses in the Committee^ report which were nob referred to in the- resolution- before them. He thought they all agreed with the Committee in considering that this- loss had taken place. Thero 'was no use -whatever on their part in crying over spilt milk, and be thought it was absolutely necessary that this £3 sliovdd be written off. He thought, ' and he believed the public afc large did also that they could accept the valuation put by bhe Committee on the s6onrtttes aa fair valuafcion,and that they placed the affairs of the Bank before them in a clear, fair, and basin-ess-like way. But there were other ' marts of the report that were not clear, air, and business-like in so far as those to whom they referred were concerned. He would re- ! fer to fche points to which he alluded. After ! stating what theyconsidered the losses were, '•the report went on fco say-"It & obvious Ito ns that for years past fche Bank has been saving a rate of di-idend which ought irro* to have been paid. Securities have I been held, and accounts kept go.ng in the vain hope of a recovery ot the values placed upon them in what was, in fact, a period of inflation. That was a very grave charge indeed, ana'ifc reminded him of fche charge made ten years apo against the directors of the Glasgow Bank. In paragraph 8, in reference to tbe business in Auckland, the report said: "The genera] character of much of the business earned On has been most objectionable-and the policy pursued open fco grave censure. Weir when he read the report he was rot•prised' thafc fit this meeting some resolution m,s nofc proposed by the directors asking tK§ shareholders to censure those directors What was the meaning of this oladso if it was not carried further and some resolution, confirming bhe report ■and censujine the directors, agreed to T There were many things.of this class that . should not be there at all, or being there, further action should be taken. I hen, Vain, going further, in clause 12 they read: 3* As regards the responsibility for this atateof things, thedireefcorsasyour nominees entrusted withfullpoweroveralltheolhcials, are no doubt primarily responsible; and then a few words further, tho name of the general manager is connected with that responsibility. What was the meaning of that word "'responsible" in the connection in which ib was used? Did it mean some-

thing, or did. Ib mean, nothing?. In Ins opinion, ifc meant nothing, for when he looked at the language- and- then looked afc the acts- of the Committee, he- saw the sfcronge-fc contrast. He saw. the directors blamed in language, almost without measure, and at the same time he s>.w the majority of; the- Committee turned- into- direetorsancl. sitting alongside those whom they so strongly impugned. How was that to be reconciled? Surely men of business would say that if these directors had been po culpable, so careless, so unbusinesslike, or whatever they liked to call ifc,-as-the Committee said they had—business men would say at once, " While we thank you for your pasfc services, for- the future we, decline to have anything i'urth.r to do. with your management?' Yeb they wero taking counsel wibh those very gentlemen whose, counsel they say is worthless, and.worse than .worthless. How could these things be- reconciled? No wonder further information was asked for. He thought further information was. required. He would yo fco thab paragraph bhab had been referred to so often, luui been referred fco by Dr. Campbell in his letter to the "Herald.' that morning, and by Mr Clark-in his speech :—"And, finally, we find bhab advances have been made bo some of the directors, upon insufficient security, and* from, these advances heavy loss, ha. ■ arisen, estimated by us as over £160,000, while-certain transactions have come under our notice calling for the gravest, censure." ((.'vies of "Head on—read on,") No; he would.read:<-,n, afterwards. He would like to know how they Mere to censure those wtuwe name, they,did not know, and,how. vvero they to censure for a transaction whoao nature they were not told? Then it wa,; left to go all over tho world, that the directors.of: the Bank of- New-Zealand had taken £1-60,000 and divided- it a-mongsfc them, when- he knew that there-were-direc-tors who had never. had'A single*sixpence of the Bank's money, and by whom the Bank had- never Ibsfc a- shilling. Why should this.vote of censure be allowed to.rest on them all ? lb should be passed on the right one?. They should have the. fullest information and a full explanation. What;were the name* of- these, director- on- whom bhey were- fco pass a vote of- censure? Then tocontinue witli■ the paragraph he was readin'.., "Hi nob for. more.specific action." H. word,- meant anything those words meant that certain directors had incurred legal responsibility. ; in; that, ease proceedings should ba taken- against them. ("Hear* •Hear !"), In the interests of truth,.inHie interests of justice, theseproceedingsshouldbe taken. Lot. the. challenge, thrown down.by _j>i. Campbell in that morning's. " Herald " betaken up. If a legal responsibility had been inclined let proceedings be taken that this- should not he^ brought- before shareholders, smarting under the . lossof their money, but before a tribunal careful and impartial. The Chairman had' -aid- that the work of1 the Committee-was-dOno-, but he-(tbe-pe.--ker) thought they would have to go-further. .lu.-t_ce.de-manded thafc thoy should go further. Then he came to what was to him thtr most incomprehensible portion, of. fche Committee's report: —"'JMieconuecfcionbet.ween the Bank aiui's-ie New Zealand: Eoan and Mercantile Aj£t.n.:vr Cont'sany, by. fcire.: <:h.ief- and other officials of rise B'anl* acting for fh» Loan Company,, nixk being interested in. bho working of. both, has-not,,for many reasons, been advantageous to fche Bank, and should on no account be show bo continue, {X? we consider ifc has been unduly fa verared" by fclrw Banfe "' Were they,- to _vceob that upon bhcawthvi/. ot, the Commit-

bee, wb«rt)fo_y'h«tt_e_-»»«fjie-_ftGfc in-sup-port o- t.lvi.. allegation ? They .mid bhey had nieason.., and he want reminded, ot* Falstaff,, • "For if reasons-wero-fts-plenfciful as blackberries1, yet would thoy have none of them." Justice demanded' thai reasons should be 'o-iven. and if this* statement was- nob sup- ■ ported by facts,, they had a proper right •to dismiss, it &? unworthy of- consideration. Re did nob know what i_ feferrfid' to. He-ws..-a. shareholder, in the' Bonn and. Mercanifcile, and ha* been- at- great pains fco see what t'hetd really was in this- allegation. He would: tell- them something that -would show that this statement was very cotmderabhi exaggerated if not altogether unfounded. "Tho fact was fche Bank had never io?«t ,-r single sixpence- by ifc- conriecbion wibii the Loan Company. The Loan Company •had never received' any undue favour of any kind hi ifc?? ihis-ihess witli the Bank. It had been, placed by the Bank on precisely the same footing as large business firms-in the city, as Nathan and" Company, and' other* of thab kind. •The- Company- had no- ad-^a-ntagc over: ■them, while at the close- of. the la.fr halt year it was m credit witli the Bank. It ■ w-a* imito true thaii some years ago the Loan • Ce«M.3-n-v was- wider considerable-obligation -to the Bank. But the Batik had loaned its money as to- a large company with a large amount of tmcalled-u-p capital, and on valuable securities deposited with the- Bank against bhe overdraft. ; Well, that was- banking ; and if every transaction- that the Bank bad had with its customers had tv-cried on* a? well for the . Bank a.< its transactions with the Loan Company bhey should not lie- to-day- mourning over the loss of a million of money, bufc on C the. other hand they should be anticipating in a few days to come large and hand.omc dividends. (Hear,, hear.) Ib seemed to him to be a. most extraordinary and inexplicable, thing that the only customer of the Bank mentioned in this report should be fche Loan Company, by which the Bank has never lost anything ab all, Whilst bhe names of gentlem-11 who had had the squandering of fche Bank's ; monoy to any imaginable exfcenb were carefully withheld. In the la._fc paragraph of this report there waa a sort cf attempt to draw a parallel t between the Australian colonies and New Zealand. Ib was not the first time fchafc Buch a parallel had been attempted to be drawn. Two or three years ago, when Dr. Campbell was President, he drew a parallel ot the same kind, and he said that the depression in Australia was rather worse than tie de- ; pression in New Zealand, whilat afc the same time he noticed that the presidents of ■ fche Au-tralian banks said thab the depression and the state of affairs in New Zealand were woree than they were iv Australia ; so that, perhapa, balancing the two, we • might say they were pretty much on a par. The main cause of the depression _in Australia was the unprecedented continuance for years of a very heavy _■ drought; but, as Soon as the tain from 1 lieavsn fell upon that soil, grass sprang up in every direction, cattle fattened^ and an , amount of prosperity almost immediately 1 came over Australia thab is now the as ton- ' ishmeut, of everybody. Bid New Zealand rise ? There had been rain enough here, Heaven knew. (Laughter.) We had no'o sufiered from drought, but still we were suffering from this depression, and nobody could tell when'it would life. Now, there must be a causo for this difference, The causes of the depression in New Zealaud were various ; some of them, no doubt, would be removed. There was, first of all,, the fall in 'agricultural produce. Thafc is in course of removal* and ho doubt some relief will be^ felt in consequence. He supposed a stop would be pu*> *6 th<* system whioh had been carried on for a long while by various financial corporations allowing people to play at the game of heads I win, tails yom lose, with other people's money. (Hear, hear.) That Would be removed, he had no doubt, and there would be some relief telt in consequence of that. There would nob be so-much inflation ; but the real cause of the depression in New Zealand was fche monstrous debt fchafc was hanging over us and the reckless manner m which that money bad been expended. (Hear, hear ) It had been spent in such a way that'it had brought almost no interest at •ill for bhe capital fchafc had been disposed of and necessitated a heavy taxation upon

fche peoplo of this countey toenable thorn to meet the liabilities thab the Government had imposed upon tbesm. They had to remit oub of bhe. earnings of the people of this country H millions^ aye,ar to pay the bondholders in England. A million and a-half a-year went away from 600,000 .people. — from their earnings. That money which ought to go to improve the condition of the people, and to improve the circumstances ot this country, was sent away to be _pent elsewhere, witli* oub a ghost of a hoped: any of it being returned. His opinion -was thab for years to j come New Zealand wcmld be heavily handi- j capped by fcliis enormous debt, in tA\a j struggle for prosperity with other countries whose finances had net been of such a reck less character, and which were placed by j nature under more favourable circumstances. It -was nob his intention to ! move any jmiemdment iai tbe direction _in j which h« had. been speaking—viz., with ; regard cb further infoicmafcion with refer- ■ coco to all those votes of censure, and insinuations, and innuendoes thafc he had referred; to-; aud; he would even go so far as to ask Mr Cherry to withdraw his amendment, because he knew perfectly well that it was impossible for any shareholder with any hope of success to fight against the strength of a, directorate where the directors h.eld njrmbers oi shares aud many proxies, and had large influence. It was no: use putting these things to the vote. All he could hope to do, and all Mr Cherry could hope to do, was fco try and get the directors themselves willingly to give the information that bhey asked. Whether they would, or whether they would not, he did nob know ; but he did know this, that if they did not, in the opinion of many shareholders, and in the opinion. o| a large part of the outside, public:, it wotfld be thought that tha Committee, had nob taken the shareholders, info their eanfidenc* as. tb,ey promised to do, and as, the shareholders themselves had a ri^-ht to expect. (Applause.) Tha .Chairman : I may point, out that m order bo supply full information »s to the causes.of tha loss of this £800,000, it. would take day» and weeks. It took us months to go through it. We can merely give you totals. I may say, however, that for instance; in the- North Island the loss has been almost entirely in Auckland. The amount lost in other parts of fche North Island is, a mere fraction. There was a considerable loss in the South Island, and the remainder is in. Sydnoy and Adelaide. Taking the whole million—£Boo,ooo now— and the previous sums- written off during the last- few years, the looses are made up in this way. The lows iv Auckland is nearly. eSQO-,000. ami in the- rest of the North Island'it is. practically nil. In fche South Island h. i_ about £250,000, and in Adelaide and Sydney ie is. £250,000 more. Mr U-erry: Distinguish between. Adelaide and Sydney. . . 'i'keC-iairman- : {am only speaking irom memory. 1 think they ace about- equal

sums.. , , . A Shareholder : When you speak ocAuot. land*, do-you- mean- the Province of Auck-

land? ~ , ~ The Chairman : Yes, Auckland generally, in the. remarks which Mr Render- U'oed made with reapecb fco the Committee, as : on*; who had had so much experience in commit ees. of. this kind and work generally, ho must hare been aware, that if we had fjoft. into everything—for instance, if we had gone into every specific item in a large business such as the Bank*, ifc would bay* meantftn-imin.r-se report. I may-say that ib was in the. int.rests of the Bank and bhe shareholder, that the.Committee kept their •report down, to ft* moderate dimensions as they possibly could. They _»id as little as possible, and in was-in the interest* of the "Bank that they did so. If tho Committee had said lees than they did, the shareholders present would perhaps have been tho first to say that the Committee had attempted to' shield those who have had the •management of the Bank for fche last twenty years. Mr Reader Wood also referred to the directors who were censured ■ and who are still on the Board. He made a distinction between new and old directors. Well, if the old directors have not thafc respect for themselves under the circum-stances-to resign, and appeal to you again, we have no power to remove them. Then with respect to the Loan Company, the Committee have not said anything more than that-,-iu fact, they have been very mild indeed in that reapect. You must not •forget that the great evil of this connection has been that managers in different places •have been acting for the Loan Company and for the Bank afc the ssuie time; thab is . where the mischief has been done. And as to saying that the Bank has nob lost but has gained by bhe Loan Company, 1 give you- my own opinion that the Loan Cooapaiiy has been a curse to the Bank, and ifc can be proved. (Hear, hear.) The managers of the Bank have been made use of in every possible way. I may mention one case, which occurred _ome years ,a/_o,. to show you what has been done in that way. The managers of the Bank, who were acting for the Loan Company were asked fco sell shares for the Loan Company, and in order to induce people to buy these shares thoy advanced the Bank's money for bhe shares, and held them aa security, and when the individuals who bought these shares, and who were also doing business with the Loan Company, got indebted to the Loan Company, the Loan Company turned round and claimed a .lien upon thSse shares, and they hold *hem at this moment. I can go further than thafc in speaking of the Holt frauds in Sydney. The manager at Sydney first robbed the Loan Company of £-10,000, and he held ifc for a considerable time, and when the Loan Company pressed him for the money, he took the money out of the Bank's coffers to pay the Loan Company. In facfc, he committed a fraud on the Bank, because b© deceived the officials, who did not know whether he was acting as manager of fche Bank or of the Loan Company. When this qfte-Uon came «p yow would naturally expect, where a manager was acting in a sort of dual position, if be did not: take the parfc of the Bank, at any rate he would have remained neutral. What did our late general manager do? He turned round and said the Bank must pay this £10,000, and wo paid it. That is how the Loan Company affected the Bank. I will go further, and say that in their dealings in financial matters they have had very great advantages afc the expense of the Bank, and the Committee are quite ready fco pro. c it. (Applause.) Mr D: L. Murdoch :. Statements have just been made which I think aro just as far from the truth as fche statements on which I have already commented. Holt received a cheque- from the Loan Company for transmission to" a customer of the Bank in Melbourne, and pocketed ib as manager of the Bank. The Chairman : He received this cheque as manager of the Loan Company. Mr Murdoch : He, as manager of the Bank, received fromfcherepresentativesOf the Loan Company a cheque for £10,000 for transmission to Melbourne, and in his capacity as manager of the Bank bo pocketed that £10,000, and is it fair, is it honourable, to turn round now and Bay that in consequence of the connection between the Loan Company and the Bank that I ordered the payment of that £10,000! Th» Chairman : I did nob say you « ordered " die payment. I said that yoo took the part of th* Loan Company against the Bank. Mr Murdoch : You did> eir. Th« Chairman : I said you took the parfc •f fche Loan Company as against fche Bank. Mr Murdoch : _*ou said that I ordered tho payment. I utterly deny it. I expressed my opinion in regard to the liability Of the Bank, but I defy anyone to say that I "ordered" the payment of that

£10,000. The Chairman : Captain Colbebk, who

sits, by me, says. I did not say you gave an «' order." AH Isa id was that Holt took the money out of the B&nk, aud he was enabled to take ib out of the* Bank in consequence of hie holding a dual j osition. I said, when the question came \\o be settled as to who were to bear the responsibility, you took the part of the Loant Company as against the bank.

Mr Murdoch : I ann f quite willing to accept your intention nob to have said so, but I will go further, and (Bay thafc I have seen the correspondence wftiich fcook place^be. bween the managers in -Melbourne and Sydnoy as to the tvansmis __on_of this £10,000, and ib was on thafc fcl.tafc I expressed my opinion as to the liability of fche Bank. Application was made Mfcy the gentleman to whom this £10,000 belctaged, to the Loan Company to accept the fiioney as a deposit, and the manager of the* Loan Company in Melbourne referred to !«he manager of fche Bank in Melbourne to see whether this £10,000 had been received or not. The manager in Melbourne *vrote to the manager in Sydney thab this, constituent of the Loan Company had expe cfced the transmission of this £10,000. Tbe manager of the Bank in Sydney wrote back, stnfcing fchafc I the money had' been received, and would. jbe transmitted on a certPiin date ; and then i you coolly inform the shareholders thab_ it was in consequence of mjy connection with tbe Loan Company that thus £10,000 had been lost to the Bank. I think it is a most ' unwarrantable conclusion.

The Chairman : If you -will excuse me again, I do not think you .are fair tome. What I said wa«s when the* question came, to ba. settled with the Company, who should bear the loss, you took -the parfc of the Loan Company against fche Bank. Mr Murdoch: I think I can appeal to the shareholders, that this, is not what you said. I give you credit, for having mr tended to way spmetjhing . else, but' you didn't say "it. Ah to your further charge against fche managers of the Bank representing bhe. Loan Company advancing the funds of tho Bank to take up shares, is that a most woaderful transaction? A company intends to itfsue shares ; a customer of tho Bank wouifi be very glad to take up some shares, asid he goes to the manager of fche Bank aaid asks jf he will favour him with an advance to enable him to tako up shares. The manager does so, and holds a lien udod fchesie shares until the advance is paid. Is thafc a very remarkable transaction, or one wbicih is the least deserving of censure ? The Chairman : I referred to the manager of a bank, who was also acting as agent for the Loan Company, inducing people to take up shares in the Company by advancing money to buy them. Mr Murdoch : I cannot speak of any manager having induced people to take shares ; but 1 can only say it is >a most reasonable transaction fcbat if a gentleman—a customer of the Ba,uSk--wan/.a to take up Khareain any company, fcbablie should go to his bankor and ask him to supply him with the money if he has aiofe it by him at the time.

The Chairman : My«_rt,uee of complaint is that a manager of the* Bonk should act as agent for bbc. sale of ifhese share,., and induce people to buy scares from, the Loan Company, and advantia them money to do so.

A shareholder : Was fche money lost? Mr Murdoch : I think thab is a very reasonable question to ask, The Chairman : _7ha same parties wero dqinffl business with th« Loan Company. All fche shares were "held by fche .Bank, bufc tho Bank basnet stt the present moment full possession of those shares, because the Loan Company said they had a lien on

them

Mr Murdoch: And a very reasonable thing too. I feh i.nk you are misitig up complicated questions that only confuse most - of the shareholders without accurate information. Exception has been taken to the connection between the Loan Company and ; tho Bank. That is a mere matter of opinion. 1 may say when I came fco New « Zealand tn charge of the Bank of New Zealand; I found that the Bank was moat lamentably deficient in its squatting connection. 1 found also that tha agents who had possession of this squatting connection were most unpopular with the squatters, and that the rates of business were as high as from 17 to 20 per cent.; thafc these unfortunatesquatters were mulcted in that. It struck nue at once thab it was a good opportunity noi only to fomi a connection with* a new company which was bound to bo soccessfal, but that if, wouldalsobea<rnluableallytofcheßank,and I drew out a prospectus and forwarded it to London for the consideration! of the Boa_-d there. It was done, and the company at once floated into a successful business, a business thab was of very material use to the Bank, and of very material profit fco it. Very largo exchange operations resulted, and the Bank got the benefit of them. _It may have been thab latterly the connection has not been so benefical, bufc I can say that the connection generally, from the year the Company was started, ha* been of very material benefit to the Bank. I do not for a moment dispute that individual1 cases may not be quoted in which that, connection may have been a disadvantage. I do not for a moment dispute it, bufc I say advisedly fchafc fche general connection with* fche Company has been most advantageous to fche Bank. Ido nofc know that there is any other point in connection with the statement made from the chair that I need now refer to.

Mr Cherry : I put a question at a previous meeting about tho losses caused by the manager at Sydney, and I was informed that ab the very outside they wculd amount fco £12,000. Now we are informed thafc fche lose was £125,000.

The Chairman : I musb cornecfc Mr Cherry. I said tho wholo of the losses at Sydney amounted to about £120,000. I did nob say the whole of them were connected with Holt. Of course, ifc was while he was manager fchere. Mr Cherry : In asking the question I did nofc refer to his. personal losses only. Mr J. M. Clark : Tho question was, what the Bank had lost by the defalcations of the manager at Sydnoy, and it was to that question he received tho answer "about £12,000." Mr Cherry: I do not wish to dispute with Mr Clark about the words. Mr Holt was manager at the time, and I did not simply wish fco know what he had appropriated to himself. The Chairman : Hi- personal defalcations were, of course, very much, over £12,000. There is the one item I have jreferred to today of £10,000 alone. The Chairman asked Mr Cherry if he would withdraw his amendment, and Mr Cherry declined to do so. Mr Cherry's amendment was then pub, and negatived by a larere majority, only some ten hands being held up in support of it.

The Chairman then said: The Committee, obviously, could nofc be prepared with a reply to all that might be said at this meeting. But, as I have already told you, they predetermined to consider their commission closed. They have been at great pains to arrive at correct conclusions, and they havo been at equal pains to state these conclusions fully and explicitly. Nothing set down in fche report was passed without mature Consideration, full discussion, and, I would add, the evidence of Board minutesand other records. As the Chairman, Mr Justice Gillies, told you in a pointed manner, the report) was unanimous. The mcii whose names are appended to it are not nobodies, or persons without experience of affairs. They are representative of all parts of the colony. They took up this Bank when it was in grave danger of falling to pieces, and they have already done much to rehabilitate it. They therefore decline to open controversy with anyone unless the statements of fact in the report are challenged eeriously.

For the opinions they express and the conclasions tbey arrived afc, that is on their responsibility, you may accept them or not, but they are not matters for dispute. On the other hand, they consider they have claims to be heard by you, when they recommend, in the interests of the Bank as a whole, thafc having received the Committee's report and expressed your own views, you now let the matter rest with the Board of Directors to take such further action in regard to the past as may seem proper. One part of our report has especially challenged comment: that in which we allude to losses by director-. We did nob say that these directors took your money, or that the others permitted it to be advanced in any corrupt manner ; and we respectfully decline to publish names. The phrase about more specific action had reference to dealings by the Bank in its own shares, which we consider illegal and prohibited by Act and improper, and as to which the Board maj take more specific action. In connection with advances to directors we did nob hesitate to censure the whole Board, because we consider it especially incumbent on directors to see to it that undue advances are not made to individuals of their own number, a duty obviously difficult for officers of the Bank to perform effectively. Some directors were probably passive, or perhaps even objected. I wish now, however, to make some remarks of my own. I mean they are not to be considered as authorised by the Committee, because we have had no chance of consulting properly about them, You have, I suppose, all «een a letter of Dr. Campbell's in the iporning paper. I have every respect for Dr. .Campbell, and I think his fault has been to be too easy and let things be done he perhaps did not altogether approve of. I think, therefore, his letter should bo taken notice of, though what I have to say is hastily put together. Dr. Campbell did nofc give us much time. As a member of bhe Committee I have given much time to the investigation and have read the minute books and examined accounts. I noted down some of the minutes that referred to accounts that losses were made by. Dr. Campbell says, " Were the securities insufficient at tbe value of the day ?" Well, here is a minute dated 14th November, 1882 : "It was reported to the Board that after consultation with the majority of the Board the following reply had been sent:—' Patetere Company must not be a failure, at the last moment. Let Rich make necessary subscription, taking hi- guarantee irrespective of any guarantee here which I am endeavouring to arrange. At this meeting there were present Messrs Browning, Firth, Stone, Owen, Clark, Williamson, and Campbell. They appear to have made no remark ; very likely they thought it useless, the telegram to London having been approved by a majority of the Board. Whether Dr. Campbell was of this majority, Ido nob know. He was present, and made no objection. I need nob apologise for naming this Pfttetere Company ; it is a public company, and pretty notorious. What was the security? Why, the shares your money was advanced to pay for. How was this company floated in London ? Simply by your directors, or rather tho majority, whom fche general manager consulted, advancing your money to a lot of dummies, -"our money then w< nfc into th© hands of other people ; big commissions were paid ; iots of money spent: once into ib, the Bank got drawn in bib by bit. At the very last Board meeting We had to advance more money to pay a call, some thousands, or else lose everything. As it is, a very big loss of your money has come out of that company floating: I do 1105 knew whether ib is what Dr. Campbell calls proper business for a bank. 1 think it was a'discreditable piece of business altogether. If I had more time 1 might have given you other minutes that would have interested you ; but it is needless. I say thab a lot of your money has been lost through land speculations. If the ridiculously inflated prices had continued certain parties would have made money and been reckoned very smart. Naturally, they did not continue, and your money is lo_b. I would also remark an extraordinary feature connected with the lossesof this Bank, namely, that where the losses were made to companies and individuals you will never find thafc these individuals became bankrupt. Oh.no! All their other creditors were paid 20s in the £, bub- the poor Bank had to stand in the gap and pay the piper. I will next notice the sentence about more specific action. Dr. Campbell pooh-poohs it ; another director asks us, did we mean criminal prosecution ? I will tell you what I meant for my part. We found in the accounts one named James Williamson,chare account,overdrawn £16,170 —oue of the loss accounts. We, of course, inquired into it, and we found that two or three years ago it was resolved to transfer some shares belonging to certain persons to the London register. To make up a good parcel, the Bank bought some of •its own shares, which we say is illegal, and these with others were put on ■the London market; that market was what is called fed with them, but the appetite was not very good—(laughter)—they went slowly. I remember in London about this time last year, or later, there was a good deal of talk about the Bank, it having passed its dividend. There ore a great number of shareholders in Greab Britain, poor families with limited means, maiden ladies, widows and orphans, entirely dependent on tho Bank for years. It was no trivial matter bo these people. Reassuring cablegrams wore published. One of them, I remember, said, " With any revival have no reason to fear trenching heavily upon the reserve fund." This was a deliberate falsehood, and no one knew ib betfcer fchan tho directors and the general manager. A shareholder at Home showed me that cablegram, and asked me if I believed it, aud I said "Certainly not." When I came out here and found how things really were I thought that rather queer, but when I found that about the time this telegram was published shares of the following persons were being sold on fche London market I thought it more so. The parties were the New Zealand Loan and Mercantile Company, Jas. Williamson, J. 0. Firth, and D. L. Murdoch. Ido not know what those who bought those shares now think about it. I am sure of one thing—they vnfi not think more specific action out of plaice. But this is nofc all. These shares awd some others, including fche shares bhe Bank bought, were supposed to be sold pro rata, and, in fact, some of parties, including; the Loan and Mercantile Company.gobfcheidrsbareofthepToeeeda. For some reason the !ate Mr Williamson claimed first slice, a claim difficult to allow, because others already had their share. However, ho ultimately got it at your expense, because he got the money ab the rate of about £21 pot share, and you have the shares still on your hands. This is the transaction which Dr. Campbell speaks about as "from its inception, in the Bank's interest." I will do Dr. Campbell the justice fco suppose thafc ho knew very little about it. lam sure that in this, as in other things, he allowed himself fco be used by people more 'cunning than himself. I will not take up your time any further wfifch Dr. Campbell_j letter; "not that I haive not any more bo say if necessary, bufc I have taid enough afc present. (Applahse.) Mr Murdocjh: Mr Chairman, may I be allowed a few words with reference to your remarks. V^ry grave charges are levelled at me amongnt others in connection with a certain share' transaction, and I have very little hesitation in giving a frank accouht of what that transaction was. It was resolved by the Board thab 3.000 shares should be added to the register in London, and it was determined that any shareholders within the reach of the executive—

The Chairman : The limited circle !

Mr Murdoch : Well, we will call ib the "limited circle" then—(laughter) should

have the privilege of transf erring |heu shares to London to make ; up those 3,000 : hares. Was it for the advantage cf hi"limited circle?" The arrangement was that those who put their shares inH*anM get the local market price. The diffejtence between the local market price and the nrice in London was at that time pi. was to be tho £7? The "ha** circle's?" No ! sir, tho Bank s The Chairman : The Bank did not get ifc Mr Murdoch : Did not get it! VV as the " limited circle " blamcable for that ? Ihe Bank did.get a very considerable P°«ipf it, It o-ob all the profit made on that sale of shares. Unfortunately, circumstances have arisen which have depressed the price of shares, and turned what should have been a very large profit into a loss But 1 am not aware that there is anything in this transaction tor which either the directors or myself need bush. I had 100 share- in this transaction, it was undertaken three years ago, and how many .hares have I sold ? Seven ! Was lb with any desire to clear oub of the Bank ? I had other shares on the register here. Have I attempted to sell them? They remain as they were three years ago. The Chairman : I made no reference to your shares. It was to the transfer generally, but I will go a little further and say that it may vet becomeaquestionforaLourt of law so bhab the less said about ib bhe better.' I think it was an illegal act, and therefore the shareholders are bound to be held harmless. Therefore the present directors will have to proceed against the directors at that time, and it may become •in action in a Court of law, so that the less kid about it the better. . If Dr. Campbell had not referred to ib in his letter to-day I should nob have taken any notice of it. Mr Murdoch : I bhink your statement, prior to the one just made, is of a character with many of the statements in the report dealing in innuendo, and leaving a sting that is meant to be very mischievous, and damage the credit of those referred to. And you think it right that no further nobice'shouldbetakenby those connected W ith it, and that they should lie under the imputa.ion made? . The Chairman : I say that immediate action will have to be taken against the parties who are responsible, and therefore, perhaps, it is betfcer in the meantime that nothing more should be said. Mr Murdoch : I think it is a pity, then, that you should have said so much. The Chairman : I should not have spoken of it had not Dr. Campbell referred to it in this morning's paper. Mr Murdoch : If you are going to take immediate action you should have done so without further reply to bhe letber. Bub if it is the opinion of the meeting that nothing further should be said about it, I am quite willing that it should remain. Dr. Campbell, in his letber this morning, pointed specially to the tact that the transaction was undertaken in the interests of the Bank, and that the Bank was to have the whole of the profit. That was incontrovertible. Again I assure shareholders that as far as those who contributed the shares were concerned, there was to be no advantage. They could have got the same price they got out of tins transaction it they had put their shares on the local market. The Bank expected to make a lar'>-e profit by tho transaction, bufc because it turned 'out fco baa misfortune instead of a success, tho parties were to be held up to public reprobation. It was mort unfair. Mr J usbice Gillies : Will you allow me to remind him of one transaction ? Why were those local «hares to be transferred to the Home register? It was in order to keep up the share value here, and that can be proved by the minute of the directors re-' solving to send them Home, stating that there was a large number of shares coming on the market here, and they were bound to be depreciated. It was not in the Bank's interest.

Mr Murdoch : I am right in insisting that it was in the interests of the Bank. It surely cannot be held that if there were large numbers of shares to be placed in the market, and so shares became depreciated, bhab this would be in the interests of the Bank.

Mr Justice Gillies: Ifc was nob fair to those who were to buy, bolstering up the market.

Mr Murdoch : It was no bolstering up on the part of those who contributed the shares. Mr Justice Gillies : I am nob speaking of them, bub of the action of the Board. Mr Murdoch : The shares were transmitted because London offered a better market for them than the local market, and the profit was to come to the Bank. The second resolution was agreed to, Mr Cherry being the only dissentient. The Chairman said in regard to the third resolution, he wished fco explain that, owing to an inadvertence, the words, "at their option " were not inserted after the word "directors'.* in the notice of this resolution. He would therefore move, as an amendment, "That the words, 'at their option,'be inserted after the word 'director' in this resolution."

Motion agreed to. The Chairman said in regard fco the third resolution, it was necessary to explain that the directors did not intend, for some time to come, to give effect to it. They believed they could not legally do so without an Act, and preference must be given to the new issue with which this would conflict if ib were permitted now. When, precisely, the option could be given it was impossible to say ; it would not be till the money could be profitably utilised. He would therefore move the third resolution as amended.

Mr C. E. Button seconded the motion

Mr John Graham wished to speak fco fche resolution. Scarcely a year or two ago they could not have thought, when buying Bhares at £20, that such a rotten state of things could have existed. It was very had on those who, after a long life of hard work and self-denial, had endeavoured to invest their money in what they supposed was a sure inves"tment, that they should have arrived at such a state of affairs as had been placed before them that day. It was truly lamentable. There were a number of persons he was acquainted with, who had worked hard and lived near to the wind to provide for their old age, and they had invested in these shares believing that nothing could be safer. Could not the proposed action of the directors to write down the talue of the shares be in some way modified, so as not to come with, such crushing force upon fche shareholders as it appeared to do at the present time ? They feel it keenly—he was not only speaking for himself, but for others witn whom he was acquainted-that their shares should be reduced to £7, and that an advantage should be offered to complete strangers in the matter of taking up shares. The Chairman explained that the shareholders were to have the Option of taking up shares in the colony at par, and to the outside public at 10 per cent, premium ; that is, £11. Mr Graham asked how would it be with those poor shareholder's like himself 'who had invested their all. In looking about for ah investments what could be more profitable than the Bank of New Zealand? That of all others was the most sure. He thought that the directors or the Committee should endeavour to make this more gradual, and nob comedown withsuoh crushing force on the small shareholders. He had drawn up an amendment that woald speak for itself:—"Thafc the premium on all shares shall be £3 per share, and that .the same Eremium be allotted to the old shares that aye been reduced to £7 per share, and that in all future divisions of profits and before declaring any dividends, a small bonus shall be added to such old shares from time to time until the said shares are restored to the original sum of £10 per share." This would in poms way ease the

working parfc of the shareholders, the orphans and the widows that had been so often spoken about, of the loss they would sustain by having their shares reduced. The Chairman' said the Committee could quite feel wibh those who were placed in tha posibion which Mr Graham had just stated,, and he could assure them when the Committee—who themselves represented soma 1,500 or 1,600 shares—came to know thab ti.iere was nothing else to be done but to Wily*6 off tllis *%, they looked at it in every poflsK-le way, to see it it could possibly be avoideS. ancl alvva '', s came back to fche same point, that, it could nob be avoided, and he thought they came to the right conclusion. It w#s the only action to take. They might have made a call, as they were em powered to do, but shareholders would have objected? to that. As soon as they found that the loss exceeded the reservo fund, it was impossible to avoid it. Beside« they should understand that all the arrangements made a* Home were on that undersfcanding-that th,w *>* was to be written off. . Mr Graham withdrew hvs amendment, and Mr Dingle asked if the shareholders were bound to pay up bhe £3 on their £7 when called upon. The ChairmaD said no. It was optional, but he hoped ifc would be to the .shareholders' advantage to pay up. Resolution No. 3 agreed to as follows:—----"3. That the directors at their option be empowered to receive from shareholders willing to pay the same, £3 per share bo reinstate their shares fco the original amounts of £10 per share, and on all shares so reinstated' to pay dividends on the original, amount of such shares. Provided that such, payment to re-instate shares shall nob render the shareholder liable to pay any further or larger amount than he would have been liable for if the shares had remained at £10 each, as originally created.5' The Chairman said, as to the fourth resolution, he would explain fchat thg directors proposed to put all ac-' counts and assets which, being of adoubtful or undesirable character ought to be realised as soon as judiciously may be, into a separate department, under the more immediate supervision of the j directors. Some of these accounts might, turn out worse than was expected, others; betfcer, and if they took these surpluses or deficiencies as they occurred into profit and loss account of each half-year, ifc would occasion* fluctuations -misleading and perhaps injurious. It was expedient, therefore^ that the directors seek the authority of th© shareholders so far to alter or suspend tho; operation of clause 99 of the deed of settlement, and he moved accordingly. Mr Wallis said he understood that the Bank was going extensively into farming operations, and he was afraid if that were so, being a farmer himself, the loss would be excessive. In case of any loss, would. that be met by a further reduction, of the value of the shares ? The Chairman hoped that if things went on satisfactorily, there would be no loss ab the end of the time. With regard to farming operations, the Bank had 'to take certain properties, but did not wish to hold -uch properties any longer than they could help. Many properties might be sold now" afc the sums advanced on them. As to holding thesa properties he could assure hits that ib was no wish of the Board of Directors to hold them longer than they could. help, but they did nofc wish to sacrifice them.' They would be got rid of, and they were being got rid of. During the last six months properties had been sold even above, bhe valuations, and offers had been made for others afc the valuations. They would-be-disposed of as speedily as possible. Mr F. G. Ewington seconded the mofcion. The fourth resolution was then put and carried, as follows:—" That the several assets and accounts held for realisation, and outside the category of what may be regarded as ordinary and current business, be liquidated by the directors as speedily as may be, having regard to advantageous realisation thereof, and that in the meantime such assets be transferred to, and held a.nd treated in globo. in a separate liquidation account, and so as that surplus, in realising any one asset, may be set against deficiency in icalising any other without passing such surpluses or deficiencies respectively through the ordinary profit; and loss account." ■ ■ ...

The Chairman moved fche fifth resolution, which dealt with bhe formation of a reserve fund. The directors thought ib better that shareholders' hands should be free in this; matter, so that, if they thought fit, surplus profits might be simply carried forward as the half-yearly rest, and this would be fche efiecfc of fche alteration proposed. The clause as it sbood made ib compulsory to devote part of tho profits every half-year to the reserve fund. They wished to do" away with that, but it would sfcilt be open to the shareholders and directors to propose that a certain amount be placed to the reserve fund. Mr C. B. Button seconded the resolution, which was put and carried as follows^:— "That the words beginning 'And If, in clause 102 of the deed of settlement, to the end of the clause be, and the same axe, hereby deleted." . The sixth and seventh resolutions were, then adopted as follows :—«' That, in disposing of the new shares created aud authorised to be issued by the resolution of the special general meeting of proprietors, held: on the third day of October last, the Board oi Directors may make it one of tne conditions that payment for such new shares may be made by such instalments as the Board of Directors may think fit. " ihafc the directors are hereby requested and empowered to apply to Parliament for statutory confirmation of the resolutions passed at this meeting." • In regard to the seventh resolution, tne Chairman stated thab it was formal, and had reference chiefly to the power conferred under the third resolution to accept £3 per share on old shares, and which required legislative sanction. The Chairman announced that there would have to be another meeting to confirm these resolutions, because the halfyearly meeting was to be held on the 22nd instant, and it was necessary that all these matters should be cleared up before that date, so that at the half-yearly meeting they should be able to start afresh. The rough minutes' were then read, and the proceedings terminated.