BANK OF NEW ZEALAND.

Auckland Star, Volume XXV, Issue 231, 27 September 1894, Page 2

BANK OF NEW ZEALAND.

SPECIAL MEETING OF SHAR.EHOLDERS.

STATEMENT 1 BVMfc JOHN MURRAY.

ELECTION OF DIRECTORS,

(BY TELEGRAPH.---PRESS ASSOCIATION.)

Wellington, Wednesday. The special general meeting of share' holders of the Bank of Now Zealand, called for the purpose of electing five directors in bermß of the Bank of New Zealand Share Guarantee Act, 1894, was held this afternoon, There were about 50 share, holders presenb, and 42,383 shares were represented by proxy.

On the motion of Mr Martin Kennedy, Mr John Murray was voted bo the chair. Mr Murray said : This; is a special general meeting of shareholder! called for a Bpeciftc par pone, viz., the election of five directors in place of the diroctora in London, who have jusfa resigned. Under the regulations imposed by bhe Bank's^ Deed of Settlement, no obher business can be transacted to-day. I can well underafcand bhab shareholders are anxious aboub their affairs, and desirous bo obtain information on various points, but I hope they will not take ib amiss when I say bhat, besides thab this is nob the occasion, I am nob the person to speak of the internal affairs of the Bank. Ib would bo presumptuous in me bo do so. lam neither a director nor unofficial. I simply undertook, ab bhe instance of the late Board, a special mission, which will be accomplished presently, when you have elected new directors. I will, however, with your permission, say a few explanatory words regard ing. matters which have been bhe subject of my intervention, antl as to which I am, therefore, competent bo Bpeak. The mosb important of these are bhe uew relations which have been established between the Government and the Bank. These are characterised by two features. One is the guarantee by the State of two millions of capital, on which only 4 per cent, has to be paid. This so adds to the strength and stability of the Bank, and will by and by tend to add so to its profits, bhab ib is obviously in the interests of shareholders, and therefore calls for no further comment. The other is bhe right) and duty of the Governmenb to appoint a president and auditor. Some people Bay, and others pretend bo think, thab the Governmenb will appoinb to these imporbanb offices prominent political men, supporters of their party, wifchoub due regard bo fitness. I feel confident thab.bhe Governme»b will belie any such anticipation, and thab the appointments when made will be found creditable to the Government and the colony, and advaabageous to your interests. Again, ib has been said, " bhe Governmeub will run this Bank ; ib will be a political machine; tbe Governmenb will know all aboub customers' affairs." Thia idea has, I think, been mainly promulgated by persons anbagonisbically interested. Ib U entirely erroneous. The Governmenb will know nothing more aboub the confidenbial affairs of the Bank in future than it has known in the past. The President, while representing bhe Government) and primarily safeguarding bhe inberests of the country, will be an officer exclusively devoted to his duties and attached to the Bank, and to that exbenb an official having its interests ab hearb. The auditor will be in the posibion of a bank inspecbor, with this difference—thab he will nob be responsible bo the directors, nor hold his placo ab their discretion, and will therefore be under no temptation to be subservient to thorn. Both officials will be under bhe usual honourable pledge of secrecy. They will nob interfere with or hinder, but will rabher promote bhe ordinary business of the Bank. The President) will only interfere wibh his veto bo stop improper business. If, for instance, bhe directors were bo help themselves or bheir friends bo your money; or were bo make ra«h and speculative advances ib would be his duty to stop such transactions, and if we could conceive of hia prohibition being disregarded ib would next be incumbent on him bo report bo bhe Colonial Treasurer, who would then apply to the Supreme Courb to restrain the directors. This is the sum and substance of what the Governmenb can ever do in tbe way! of interposition in the Bank's affairs, and ib is cerbainly to your advantage thab in case of need they should do so much as this. Another mabter I have dealb wibh is tbab Of amalgamation with bhe Colonial Bank, so much canvassed lately. As this is, for the presenb ab leasb, quite off, ib may aeetn superfluous bo say anything aboub it. I may explain bo shareholders bhab my chief motive in promoting this project was to add largely to the business, and, therefore, to the profits of bhe Bank. There has been much superficial and not a little hoßbile criciciam of the provisional agreement which was arrived ab. Some persons could nob be satisfied that bad business would nob be taken over ab your risk. Ib was impossible thab I could guard againsb this more effectually than by stipulating that your directors should be the judges of what was to be taken and whab rejected. Then ib was-contended that the Bank of New Zealand was bo be handed over to the Colonial Bank. This seamed to me bo be negatived by bbc stipulation thab your appointees should be preponderant on the joint Board. Finally, I come to the election of directors, buo notice was given, and ib was open bo a»y qualified shareholder to announce himself as a candidate. Six genblemen gave the required nobice. I had requests from shareholders aba distance bo bell them whom I recommended. I thereupon issued a circular of which you received a copy, recommending1 the five gentfemon.whom I have named. I know these genblemen and am well satisfied wibh bheir qualifications. In response to my circular I have received proxies from colonial shareholders representing some 29,000 vobes. I did nob seek, nor do I hold, any proxies from English shareholders. Mr Murray concluded by proposing the election of Messrs W. Booth, M. Kennedy, T. G. Macartny, Hon. W. W. Johnston, and R. H. Glyn as the new directors. The motion was seconded by Mr G. M. Kebbell.

Mr Lodder (Wellington) proposed thab the number of directors should be increased to eight. The Chairman was afraid thab notice would have to be given of such motion. There were only 50 or 60 shareholders present oub of 2,200 in the Bank, and no such change as was proposed should be made without due notice to the other shareb iders. Mr T. McKenzie (Wellington) aekod, to . >faab extent were shareholders liable bo the Government!

The Chairman replied that tbere waa a reserved liability oE £10. Mr Mackonzie thought shareholders bad oeen roughly used, and had had lititle cay in the matter. The bwo millions, ib was said, waa to be the salvation of the Bank, which must to his mind have been very strong to stand the knocking about ib had. He pointed oub that in the past three commissioners had been appointed to inquire into the Bank's affairs, and ib was under* stood that they bad presented a favourable report, yet one of them had presented an Inexplicable report, bub thab was only after he had secured himself. He thought the Government owed a debb of gratitude to the Bank for assistance in the paab, and declared thab had it nob been for such assistance the colony would have been bankrupt?. The Bank in the old days was a very flourishing institute, paying high diri*

denda, bat all ab once ib went wrong. The Bank bad formerly lenb bhe Governmenb an •mounb almoab equal to bhe full amount of its capital, yeb tke Governmenb now came to them in the most patronising manner. The shareholders had been true to the interests of tho colony, and were deserving of every consideration on bhe parb of bhe Government. He thanked Mr Murray for his lasb ■ .letter bo bhe GoverDmenb, and trusted thab bhe Bank would retain its former position, and thab such success would be of a permanent character. Mr Bianchard (Wellington) thoughb it was due to shareholders that some explanation should be given of the circumstances which led up to the application bo the Governmenb for the £2,000,000 guarantee. Shareholders should know whebher there were any special losses which led to so large an amount aa £300,000 being written off.

Mr Murray said the circumstances which led up bo bhe application being made bo the Govenanionb had already been published. He explained bhab the necessity arose from a fall in bhe profits, nob so much of the Bank as the Estates Company. There had been a fall in prices, trade was bad, and in consequence bhe directors found themselves in bhe position of being unable to declare a dividend ; therefore bhe position was a serious one. As to the other question, the affairs of bbc Bank, he reminded bhem, were nob a very fit subject for discussion at a public meeting. He did nob propose to commit himself hastily to anything which he had not had an opportunity of considering. Mr Blanchard thought the shareholders were entitled to the information; and, continuing, said be would have preferred bo see some shareholder nominated who had something bo lose, one who had pub money into the Bank in the old days, and wished bo redeem ib.

Mr C. W. Tanner (Wellington) was also of opinion thab shareholders should be made aware of the position. He congraoulated Mr Murray as the only man in Now Zealand who could have obtained two millions guarantee from the Government. He trusted they would soon see the Bank paying dividends oub of income. The books had formerly been examined and the budnesa reported Bound, and what he would like to know was how much more was to be written oftshares? As to amalgamation having fallen through, he aaked if a further call was to be made. Ho thought the publication of the proposals for amalgamation before the decision of the Government was obtained was prejudicial to the interests of the Bank, and aaid there waa a feeling among shareholders thab no one would be elected a director unless nominated by Mr Murray. Another shareholder suggested closing a number of branches which did not pay. i Mr Murray, in reply said there were five branches in Australia, and all wore paying. The general question of closing some branches had been already considered. It was not thab all branches were nob paying, but thab they were not paying enough, and he pointed out that the Bank could do twice the business without -an appreciable addition to the expense. As to the position in which the Bank had drifted he said ib was known Snab in 18S8 it could not pay a dividend. A Committee was appointed, reports were made, and independent) valuations were obtained. The Shareholders' Committee report, to the effect that there was sufficiency of provision, waa challenged and referred to a Committee in London in no way responsible for the administration in the past). Mr Hean had then been deputed to visit the colonies and make a full report on the afiaira of the Bank. The shareholders of the Bank of New Zealand were not alone in Buffering from bad times, and he declared no bank in the colonies had faced a position such as this Bank had on two occasions. Some of the banks in Australia has been in a very bad way, and calls had been already mado there. The position was mainly due to depreciation in the fall of values, combined with taxabio'n. Ib had been asked why the Government, .if. it had no intention of agreeing/ to amalgamation, had allowed tho details to be published. He said he believed the Government were at first in favour of the scheme, and thab some circumstance must have arisen to change their views. He was quite satisfied that in the appointment of a President the Governments would make a good selection. Mr Murray Explained why he had fixed on five as the number of directors :—l. Economy, ai shareholders were nob anxious te pay for more than were necessary. 2. That his experience proved that in canes where there were more than the required number of directors the work fell upon two or three, and the others were dummies ; therefore ib was more in the interests of tho shareholders to have good workers. If whab shareholders did to-day was nob satisfactory a special meeting could be called to reconsider tho number. As to Mr K. H. Glyn, h« had aaked him to stand in caso amalgamation came off. He thought Mr Glyn was quite prepared to resign if the shareholders wished ib ; the vacancy would then be filled by the directors until the half-yearly meeting. In reply to a question he said the London directors had resigned. Mr John Byley (Dunedin) thought the discussion had taken a wrong direction. They should nob go in for recrimination and fault-findiug, as those who had gob the Bank into its position were not here. Had the counsel of the Chairman (Mr Murray) been taken in the past the Bank would now be in a sound position. There were in the old days, he said, directors who had helped themselves, and brought the Bank down. Circumstances had been operating which brought down values all round, and all must be prepared to meet that. With wise managemenb the Bank would regain its former-position. He admired the statesmanship of the Government in connection with the guarantee. Tho Bank had helped the Government, and the latter now reciprociated in assisting an institution which had so largely assisted the colony. The qweßtion not only affected the Bank, bub the whole colony. Had bhe Bank been compelled bo close its doors, no one knows whab would have been the result. Speaking as to the directors nominated, he said the duty of shareholders was to aacerbain the character and abilities of bhe gentlemen seeking the position. He bad done that, and was prepared to support bho names mentioned. One redeeming feature of the guarantee question was thab the Government was to appoinb the Presidenb and an auditor. He deprecated the new Board making a call, and pointed oub thab a number of the poorer shareholders were dependent upon their shares for a livelihood. A call should only be made as a lasb resource. He regretted the amalgamation scheme had nob been completed, as it would have resulted in a saving of a sum of £50,000 annually, and ib would have been a source of strength to the institution. Mr George Allen (Wellington), as one of bhe oldesb shareholders in bhe Bank, said he would like to see the number of directors incroftsed to seven, and asked if holders of new stock,who were guaranteed 4 per cent., were liable to calls.

Mr Murray replied in the negative.

The motion for the election of directors was then put and carried unanimously, Mr Lodder's amendment finding no seconder.

The Hon. W. W. Johnston, in replying on behalf of himself and the other directors, eaid the question as to their competency would shortly be pub bo the tesb. He declared their officers were fully determined nob to inflict hardships on shareholders.

The meeting closed with a vote of thanks to Mr Murray,

Balzac: A man mast be ft fool who does nob succeed in making a woman believe that) which flatters her.