THE BANK OF NEW ZEALAND. (FROM THE "BULLIONIST.")

Daily Southern Cross, Volume XXIII, Issue 3044, 29 April 1867, Page 6

THE BANK OF NEW ZEALAND. (FROM THE "BULLIONIST.")

It is quite refreshing to turn from the wretched details of law and liquidation which have been ao rife at home during the past year, and see what is doing amongst our colonial kindred. There has been a noxious air about our city, sadly prejudicial to weak constitutions, and the infant mortality in the banking world has been as remarkable as tbat which has excited so much atten don in the world cf society. Many of the juveniles have disappeared after a short and painful existence ; some have perished scillborn, and some have gone through the trials, but remain wheezy, and not promising in condition ; though it is hoped, by friends and admirers, that, with care and nursing, they msty come round to robust health in due time. But let us glance at Australia, or New Zealand ! It is the change from the city to the bush, from dark pent-up streets and fonl air, to the fields, and woods, and sweet winds. It is an escape from the feverish excitement of scheming and intrigue, finance ligging, and the race for luxury without toil, in which numbers have been crushed and ruined, and the few m ten thousand have succeeded. We turn to a world where there is plenty of room, where all who come are welcomed to add their contribution of industry, and draw the full return of profit ; where hard work and honour go hand in hand ; where the perseverance and integrity of an enterprising people are building up the great empires of the future. We have now the pleasure to present our readers with the record of the Bank of New Zealand, a brief history of five years, which may be usefully considered here by directors and shareholders alike. It would be difficult to produce a parallel, and we think it impossible to find a more illustrious inscance of success. This has been brought about by no new methods, nor by any unusual felicity of circumstances. New Zealand had been well supplied with banking accommodation long before our mihjpnt took the field. But in the fact that the colony in this respect was a sort of dependency to Australia, lay the opportunity for home enterprise, and the foundation of an independent association. Nothing that is worth having can be obtained without trouble, and a considerable amount of this was expended before the bank was brought into existence. Whether the scheme originated in Great Britain, or the Britain of the South, is not at this moment clear to us. But we are under the impression that a prospectus published in London, in August, 1853, had some connection with the subject of our notice, though there is a divergence between the first proposals and the ultimate settlement. The prospectus in question indicated a company with a capital of £250,000 in shares of £20 each, whereas the bank is constituted with a capital of £500,000, subject to increase, in shares of £10 each, all paid. The nexb new? of the incipient bank was two years afterwards, when information was received from the colony that notice had been given of an intention to apply to the House of Representatives for an Act to incorporate a joint-stock bank. It appeared now that the Oriental Bank Corporation had decided upon the withdrawal of their establishments in the colony, and made arrangements for the transfer of their business to a local bank of a sister colony, the Bank of New South Wales. The colonists of New Zealand were jealous of this intrusion, more especially as the practice of the other banking institutions of the colony, as revealed by the Government returns, had been rather to withdraw capital from, than to introduce capital to, the colony. They, therefore, decided to start a bank of their own. So, in the autumn of 1861, came something tangible. The company had really been incorporated by Act of fclie General Assembly on 29th July in that year, and busjn.ess was about forthwith to commence. The capital was now stated at £500,000, in 50,000 shares of £10 each, of whiph half was to be called up. Business was at last in view, directors were elected on the Ist October, and the head, office at Auckland opened to the public on the 16th. Thus the project, which, like Mahomet's coffin, had hung be- ; tweeu heaven and earth, belonging neither to the one nor the other, for eight years, was at last esta- ' blished upon terra firma, The long-<suspended idea was reduced from its tantalising position in nubibus, ; and founded as a concrete body, corporate in feet and substance. To compensate for previous delays, a vigorous activity was at once manifested by all concerned. Eleven branches and agencies were established within the first six months, exclusive of the goldfields of Otago, and a large amount of support was rapidly secured. Onr own great banks in London, at starting, djd not in twelve months equal the exhibit of the Bauk ot Npw Zealand at its first halfyearly balance. The sjjcceqgful start was followed by continual accesiions of new 'friends and new business. The liabilities at the end of tne second | half-year had nearly doubled in importance. A year afterwards they had more than doubled again, and a satisfactory rate of increase has been maintained ever since. The figures given in the subjoined table show these results at a glance, as well as some others still more significant. Dividends have been paid from the commencement at frequently augmenting rates, tillthey have reached^ per cent, for 6 months, at which figure they hav.e been 'maintained for the last year and a half. The capita} has been sailed, up by instalments of £1 each, first at interval of six | months, but latterly, in consequence of the'iner.easi? ! of business, of three months. Thus, during the whole period of five years, only a portion of the capital has been in operation, and yet the total earnings approach within a fraction of 80 per cent, of that item when taken as fully paid. The reserve fund, accumulated entirely out of profits, already stands in the proportion of 30 per cent, to the capital, equals in value £3 per share, and if added to the average dividend paid from the commencement, viz., 124 per cent., shows a net earning of 16 per" c£Rt. per annum. Beyond this, the directors have assisted the .clerks in their employ to establish a provident and gi&rantee /und, and hare presented a free grant towards the funds 'of,, £$„0,00 by way of beginning and encouragement. The fund ' was not carried on, however, and the bank has adopted the Colonial and Foreign Banks Guarantee Fiig& -lately established in London, and has con^ fcribiited £i,Q'QQ £0 £he rcrsrvo fund of that institution. •' " ■ '*'■"■ . When the bank was first established the OrfenkJ Bank Corporation acted as their Loridoncorrifcpbn-* deats ; but in September,' lB62, a branch *r*s •pjmedi h«#e, .and the agency was thenceforth taken intoi wtottwtf pwi^wids, la 1863, and sabie^uently,loroi I

have been negotiated here both on behalf of the General and the Provincial Governments of New Zealand, and this business has, no doubt, been a source of profit, whilst it has brought with it a certain amount of prestige which has not been 'without influence in the extension of the business. The single check in this course of prosperity was reported in October, 1864, when a commercial crisis in South* and, and an indiscreet advance at Dunedin, entailed losses larger than usual. The effect of these will be seen in the table. Instead of adding a large sum to reserve on that occasion, the directors could not afford to appropriate more than £5,000. The shares are quoted in our official list at 8 to 9 premium, and the holders in the colonies are no doubt well contented with their investment, and justly proud of their bank. We trust they will keep it strictly to its work, and not launch out too rapidly. Early success has not proved fortunate in the end here, and the colonists will do well to profit by our doleful experiences. We make the remark in view of the opinion of an influential shareholder, stated at a former meeting, that the capital of the bank ought to be £5,000,000. There is plenty of time for that large figure in th« future, bat it is most important that all concerned should make sure of maintaining the earning power before entering upon any schemes of enlargement.