The Press. SATURDAY, DECEMBER 22, 1906. THE BANK OF NEW ZEALAND.

Press, Volume LXII, Issue 12683, 22 December 1906, Page 8

The Press. SATURDAY, DECEMBER 22, 1906. THE BANK OF NEW ZEALAND.

The announcement which tbe Chairman of the Bank of New Zealand was enabled to make yesterday should help to put the shareholders in a pleasant frame of mind for the proper enjoyment of Christmas. Twelve years ago the Government of the colony had to come to the assistance of the Bank in order to save it from insolvency. Twothirds of the reserve liability of the shareholders were called up, and not a few who believed themselves to have a comfortable nest-*gg in reserve, suddenly found themselves confronted with a demand which they w<ere not able to meet. Some of them struggled manfolly to pay the first call, simply to find that not only were their -hares, with the call paid, of no value in the market, bat tiiey .were unable even to give them away. When the second call of £3 6s 8d was- made several shareholder, were forced into the Bankruptcy Court. The prompt assistance of the Government saved the Bank itself from going unuar, the Assets Board, a. our readers are aware, being created to relieve the institution of its dead weight of unrealisajble properties. At that time the 'prospect of the shareholders ever recovering anything from the wreck seem<ed remote, and a good many pessimists fully expected that the colony .would in the end havo to make good a considerable deficiency In twelve short years, however, a wonderful transformation has taken plaoe. Fortunately, when the Government came to the Bank's assistance it waa just as the .tide of the colony's prosperity wav at the turn, and it has risen steadily during the whole period. Prices of produoo improved, our output was increased, and land which had been unsaleable—a fact which had a great deal to do' with the Bank's diffi--crulties—steadily rose in Value. Meanwhile the Bank was ably and prudently managed, and the Asset-? Board, although its methods, were more open to criticism, managed to reduce a good many of the globo assets into a taoro liquid form. The combined result is that yesterday the Chairman was able to announce that, the last vestige of the old deficit having been wiped out, the Assets Board had been dissolved, its remaining properties were taken over by the Bank and the business of the latter was now in such a prosperous Condition that the Directors felt justified- in paying a dividend o" 10 per cent, on the ordinary shares thia year, the Government, in accordance with the Act, consequently receiving 7_ "per cent. _on the preferred share.. 1 It *s a very pleasant Christmas-box for uhe shareholders, who also have the gratification of knowing that shares which at one time they were unable to give away are today quoted a£ £9 in the open market. Not only the directors and shareholders, but the colonists at large, are to be congratulated on this eminently satisfactory position. TJie wisdom of the Government coming to the. assistance of the Bank in 1894 is mare than justified. To Mr Seddon belongs the credit of assuming tbe responsibility, yet it must be remembered that he received the willing ofr-ope*a-tion of the Opposition, without which he could hare done nothing in such a crisis. We have explained on a previous occasion why the sudden Socialistic demand for the State either to take over the Bank altogether, or receive a. lkrger share of the profits 'than is given on the preferred shares under the Act of 1903, is unjust, and ougni not to be listened tio\ Complaint » made that, however prosperous the Bank may become, the Government cannot receive more than 10 per cent, dividend on ita shares. Considering that those shares carry no liability, and take priority, both as to capital and interest, over the ordinary shares, we oureelvea should say that ten per oent. was a very fair return on tne capital invested. At auy rate tbe demand for more oomee with a very ill grace from those who are always inveighing against capital receiving even really modest reTurns, and whose aim is to reduce all incomes tliat are at present over a certain amount. At the same time it is to be hoped that the general public will art be led astray by the extravagant estimates put forth by some of the Socialistic critics as to possible future dividends on tne ordinary shares of the Bank. For our part we consider that if the shareholders continue to receive ten per cent, during tire currency of the Governments guarantee, they will do very well. The directore should now devote themselves to building up a strong reserve fund, not only to reinforce the Bank's position as a matter of ordinary prudenoe, but with t view , to enabling it to dispense with any further guarantee from the Government when the present term expires. |