THE BANK OF NEW ZEALAND. THE DEBATE IN THE HOUSE.

Evening Post, Volume L, Issue 42, 17 August 1895, Page 4

THE BANK OF NEW ZEALAND. THE DEBATE IN THE HOUSE.

— — nc After we wont to press yesterday tbe <lc 'remier continued his Bpeeoh on the Bank "I if New Zealand. Referring to the invest- jj' ( aent o£ the second million, ho said that so | t ar any investments mado had been very be food indeed. Where foreign or New Zea- ™ and Consols had to be purchased, the l)t uterest was lower than the Bank was pay- , c mg. That wonld be a m-itrcr for tho Com- » mittee to rectify, if possible, pnd also as to "■] fie investments in foreign bonds, prevent- |y ing the mont-y bciiijj available in New i' Zdalund Also, they iroulil have to consider | bhe po-itionof the Assets Company, md h0%% ° lo ui-re.i*' tin' t-aruiiiu power of th« "nnk. It w id sai 1 tlmi the < 'imimittee bh uld liav < been set up Übt j ear. The Government did j investigate, bat he was not going to soy J whether the information then procured wai . correct. ("Oh!") Those who gave the information were, it now transpired, not them- r selve fully seized of the position. (Cries of , " Oh ! ") The Government to the best of . its ability did the proper thing with the in- * formation at its command. There was a c Committee in another place whioh got as J . much information as the Government got. f (Captain Russell — That was none.) At least . they oame to the same conclusion as the • Government. He would do the same thing j again under similar oirenmstanoes, but not j in the same way. Had they had the f information then they had now they : would not have asked that the asßets of i tbe Estates Company be placed on the t Statute-book at their book value. "With ' that exception they had nothing to regret. If they took any other course than thai they were taking, they might be aooused of , keeping, book from members reports of the Auditor and the President, which they i should have. The Bank mast be put into a | position to do pure banking business, and ( the sooner that was done the better for all concerned. (" Sid that mean a State , Bank?") There were a large number in the Honse and colony in favour of a State Bank, and the feeling was growing, but the reason was that public confidence was shaken by what had happened here and in the other colonies. Bnt this would be allayed by what the Government proposed to do. The interests involved were of a national charaoter, and shonld be bo treated. The interests involved were very great. Members were entitled to the fullest information, but at the same time other interests were involved, and no one would ask that the private business of customers of the Bank Bhonld be placed before members. Therefore, there mußt he judgment with the Committee Members could attend when there were matters whioh in the opinion of the Committee they might hear. (Laughter.) Members now withdrew when Committees were deliberating. (Mr. G. W. Russell— Only by courtesy. Mr. Pirani — Not when evidence was being given.) He defended the constitution of the Committee, and was satisfied its report would give satisfaction. He moved — " That a Select Committee of six members be appointed, with power to confer with any similar Committee appointed by the Legislative Council. The Committee to examine into and report upon the Bank of New Zealand Estates Company and its relations with the Bank of New Zealand; to enquire how, in the colony's interests, the two institutions can best be separated ; and how the earning-pewer of the Bank of New Zealand may be increased, its stability insured, and its usefulness extended ; the Committee to have power to call for persons and papers, and to report within one week. Suoh Committee to consist of Captain Russell, Sir £. Stout, the Hon. Mr. Ward, tbe Hon. Mr. M'Kenzie, Mr. Buchanan, and the mover." Captain Euseell said his position was somewhat strange. Laat year he and his friends asked that there should be a Com mittee before they passed the Bank Bills, but this was refused them, and with the Government remained the whole responsibility. The Government had a majority to do as it pleased with regard to the Bank. (Cries of " No, no," and •' Question" from Government supporters.) Even now that the Committtee was to be set up the responsibility must rest with the Government, and not with the House. All he could do would be to t>btain all the information he could for tbe Houbo. They could not do this work in two days. (The Premier — The Committee will meet to elect a chairman and arrange preliminaries, and then begin work on Monday. It conld not finish on Monday.) It could not finish in a week. It was absurd to attempt a work which bhonld take months. He would sot receive ex parte statements from officials of the Bank. He would insist on knowing everything connected with the Bank and the /ssetß Company, and if he were not satisfied would not appond his name to the Committee's report The request for this Commission fhould have come from the Bank and tho Assets Company, and not Irom the Government, for if the Committee's report was damaging to the institution would it not greatly strengthen its olaim upon the colony P (Hear, hear.) Every offioial who appeared shonld have to answer every question, of whatever nature, that was put to him, for the reports of these officials had been so misleading for years past as to apparently have been intended to mislead. There were four Ministers on the Committee who were responsible for what had happened last year, and were deßirous of throwing the responsibility on to the House. These Ministers would go to the Committee with their minds already made up, and they would have there a Government Bupporter as chairman. (Mr. Seddon-I will not m&ke a Government Eupporter as chairman ) From a statement made by Mr. Larnach in the House yesterday, it was evident that he had made up his mind in a certain direction. He wsb direotor of a colonial institution, and his brother direotors might be held to hold similar views, and one gentleman from the other House was .a direotor of the same institution. Therefore five members of the Committee might be held to go to it with their minds made up Unless the Committee could have access to the accounts of the Bank's customers, the investigation must be a farce, because it had already been shown that the valuations were unreliable. A resolution of the Bank should have heen antecedent to tbe enquiry, otherwise the Bank might Bnap it* fingers at the Committee. Mr. Glyn, in London, bad deolared that the Bank wanted no more capital. Then Mr. Murray assured the Premior, and tbe Premier the House, that the payment of two millions of new capital wonld set everything right. Then the Premier said the Assets Company was paying interest, and now he said it waß only the Assets Company that was a drag on the Bank. From first to last they had been hoodwinked and deceived by tbe Bank and by the Government. The Government last BOBBion deceived and misled the Honse. The Government was itself ignorant of the matter. (Hear, hear.) The Premier came down to do the whole thing in a big and high-handed manner, and it had proved Ministers -were grossly ignorant, and that they themselves had been deoeived. Capital was so oheap and plentiful that now an; solvent Bank could obtain assistance from other institutions. He would not be an aotor in any farce, and he hoped that, instead of a perfunotory enquiry of a week the House would insißt on a full enquiry 61 at least a month. (Applause.) Mr. G. J. Smith did not consider the request for investigation shonld have come from the Bank, as Captain Euseell bad suggested. The statements of the officers of tbe Bank and of the Minister during the past two years were quite contradictory. Had the Government taken any pains last year it could have ascertained what the Premier stated now as to the value of the assets. These continual investigations would shike the oredit of any_ institution. He moved to make the Committee ten instead of six. Mr. Bell said last year he had held that the House could not deal with the affairs of a private institution without the assent of the shareholders. He was told the Law Offioers held otherwise, bnt he proved to be correct, for it was found that no one dared make the call proposed till the shareholders adopted the constitution imposed on the Bonk by the House. (Hear, hear.) Now the Honse and the Government would be assuming a very serious responsibility in interfering again without a request from the Bank. He believed Mr. John Murray's statements last year were incorrect, but he did not believe he intentionally misled. Mr. G. W. Rnssell considered after the statement of the Premier, that though he was not going to make this a secret committee it would be a matter for good taste on the part of members to refrain from attending. (Laughter). What was done _nd was being done was tentative, and there would be only one way out, and that would be for the State to take over full control of the institution. He would move, aB an amendment, that the Committee also consider the question as to whether the Bank of New Zealand be taken over as a State Bank, tbe two millions guaranteed to be treated as a part of the purchase money They shonld have a State i'ank with the best man obtainable as President, who shonld be given the status of a Supreme Court Judge. Sir Robert Stout said it wonld not be proper for him to disouss what might come before the Committee. The Committee must be a seoret Committee, and the Premier should move so. (Hear, hear). It would not do to have tbe private business of the Bank told to any but a seoret Committee. One week also would not be suffipient to investigate. (The Pre""c* — 'It can be extended.") Somo years ago he had suggested to Sir Harry Atkinson the establishment of a State Bank But if they established a Stale Bank, it must be a bank of deposit. It would be ruinous to the State to set up a bank to lend money to commeroial_ men in view of the vast corruption to whioh under our present system of doing everything for Party it would give rise. (Hear, hear.) It was easy to talk bnt difficult to perform. They heard some years ago great talk about the bursting up of estates. The Acute Company was one of the largest landholders. Was this tbe end of the bursting np ? He pointed out on the graduated tax that its effect would not be to burst up, but to make it impossible to sell huge estates. Mr. Montgomery hoped when it came to be a question of a Sitate Bank no one would talk about givingtwo millions to take over a bankrupt e»f»te. They had committed themselves to two millions, and he hoped they would oommit themselves to no more. (Applause ) Let the Bank work out its own salvation. The Committee was simply the Ministry contornng with two or three of the Opposition. He would not Bupport any Bank Bill simply recommended by any half-dozen members. Mr. Duthie said no reasons had been given for, setting up a Committee. The President and Auditor were Government officers, and conld themselves investigate, and the Bank had the strongest directorate obtainable in Wellington — one much more capable of deoiding what would be to the advantage of the Bank than any Committee of the House. (Applause ) It was only when a bank was solvent that the State would be justified iv supporting it. The Government Should have ascertained this before it brought down its proposals last year. Instructions were f ent out to Mr. Murray, and he oommunj-

itad with Ministers. (The Premier-" No. o ; we only saw a telegram.' ') The Premier f light say what he liked— he (Mr. Dnthie) 1 nsio that he was given by Mr. Murray 3 mple notice and ample time, yet he made 1 o investigation, ftnd only oame suddenly ] own to the House when the crisis was 1 pon them. The Bank, with the eeoonri , lillion and tho amount of the call, should i c quite able to arrange its own affairs. t was for the Bank to prove its own olvenoy, and if it was necosaary to make a utthor call, but the State should Rive not «c copper more than it hud done. If, on tho thpr band, Ihe Bank waß not solvent, the ooner this was known the better. Theße uvoßttg tiona would e'nako confidence in ,uy bank, and he brlievad the Mini-try was imply seeking means to cover its gro9B jlundera of last year. (ApplaubO ) Wrh a 'omuiittae hiving a Government majority, Uiniveri wrre simply endeavouriLg to intrap m«mb<>rs>. Mr T-atiishaw thought the '"ommitteo ■h.v Mhp recn t tmt large"-. 'I'hi' lioverunci t h ri mi-loJ the House, c«iiejially ns sha Mini'-tei lor Lu-uds bail boasted that he knew all about tho Bank night months before the Bank Bills were brought down. The Colonial Treasurer agreed that the Committee should be made more representative. (Applause) Looking back upon all the oiroumstanoes of last year, he oould not see how any Government could havo aoted differently, but eince then the Government had received confidential information which should be given to the House. (Mr. O'Regan— How can the House know if it is not told f) There were matters of confidential business character whioh.it would be injudicious should be in the possession of members. A Committee of this kind mnst necessarily be seoret. (Hear, hear.) Unless they were going to destroy any institution they must respeot the confidences of its clients. Such things could not even become matters of Ministerial interference. No member of the Ministry even knew anything as to the private position of any man'B account in the Bank of New Zealand He had never aßked a question regarding auch a thing. (Hear, hear.) That must be left entirely to the President and Auditor. The Government, as the preceding Government, was aware foe some time before last year's legislation that the Bank of Now Zealand was not in a strong position, bnt no member of the Ministry had any knowledge that the Bank would require the assistance of the State more than a fortnight before the Bills were brought in. They received Mr. Murray's letter asking the assistance of the Government on the 25th June, 1895, and the Bills were brought down on the 29th June. It was only one week before that thatthe first Conference had taken place. Had the Government known, as was alleged, eight months before, it would have been their duty to have informed the House, but they did not know. They absolutely knew that had the legislation not been passed the Bank would have closed its doors on the following Monday, and the Government did what it considered beat to prevent such as eventuality. Since then they had obtained, within the put fortnight, the results of the investigation of a- new Board of Directors and of new officers, and lence they desired to put this information ,in the possession of the Committee, which, 'when it had seen it, would be able to justify to the House the action of the Government in preventing the catastrophe whioh would havo followed. The Government revenue sprang from — (Captain Kunßell — "Borrowed money")— from the carrying on of the general oommeroe and industry of the colony, and the dislocation of this must have disorganised the revenue to an enormons extent. It was the duty of the Government to prevent this. So far as money was concerned the Bank of New Zealand was in a sound condition. It could not have the use of the second million. (Mr. Allen — " Was the money in the public account ?") It was in a trust account. The Bank cannot übb it, as it was a reserve, and the holding of so large a sum of money idle was not an advantage One of the greatest sources of trouble bad been to find liquid investments to give a reasonable return for the 4 per cent. The whole of the investments were not averaging over 3 per cent. A considerable portion was invested for some time in British and German Consols averaging 2} per oent. 'Ihe officers were anxious to seonre interest nearer the 1 per cent., and bad approaohed the Government repeatedly as to better investment. The Government might have got some of this money for the public requirements of the colony, but it had only accepted £100,000 under the Lands Improvement Scheme. He thought at the time that 4 per cent. Bhould not be paid for the second million, but the officers of the institution were advised from London that it would not be safe to try for less than 4 per cent Events had proved that in the altered condition of the money market the Bank could not got 4 per cent for this money, and therefore it could not earn tuffijient to biake the profits it shonld make. The Assets Company should be separated from the Bank They must have its estates written down to their proper value, for they oould not sell at their present value, and the question was to decide what was to supply the gap which would thus be left. They must either do thiß or let the institution work out its own destiny. (Crieß of " "Why not ?•') Mr. T. Mackenzie considered the Bank should long ago have been left to work out its own destiny. '! he majority of the Committee went to the investigation with their minds made up, and it inoluded one director of a rival financial institution, who should not be there. The Bank had not offered to share its profits when it was paying 17J per cent., bnt now it proposed to share its losses. Mr. 1 uobanan, as a member of the Committee, did not see how he could do anything unless they had fnll information, and they could not do anything in a week. Would they get more reliable information than was eiven UovernmentlastyeaT? ( I he Premier, "Yes.") Be did not see hovr tho Bank, in justice to its olients, could give fuller information, and he thought it a matter of regret that the House had done what it did last year. The Minister for Landß thought, in view of the investigation to take place, it would have been better it' this discussion had not taken place this afternoon. As to the statement that he said he knew all about the Bank of New Zealand eight mouths before the crisis, all he had said was that he know, in common with other, member?, that the Bank was not in a strong position, and that the Assets estates were over-valued. The Government was told on Wednesday that tho Bank would close on the Monday. It passed the Bill on the Friday and on the Sunday they cabled to London that the Bank was to be kept up The Government wanted to hide nothing. It wished the Honse to know in a proper manner the position at the present time, as shown in tho reports of its officers. Nine out of every ten business men would tell them that the aotion of the Government last year was infinitely preferable to the closing np of the Bank and the ruin it would have bronght abont. On the Honse resuming at 7 30 p.m., Mr. Crewther said ttat no one knew the affairs of the Bank better than Mr. John Murray, but no one in making a bargain as Mr. Murray was making would consider himself called on to state reasons against it. Mr. B. Thompson said that the Premier's statement amounted to an admission that Mr. John Murray had jookoyed them. The Premier Baid they had not the fullest information. Information had been kept back. Mr. Thompson — And if he had known as maoh an he knows now the Premier would have acted differently. 'I he Premier— That is right. Mr. Thompson said he would not vote for any proposal throning fnrther liabilities on the taxpayers of the oolony in connection with the Bank. (Mr. O'Jfegan — " Hear, hear.") The rank and file of the House should be represented on the Committee. It was not a Party question. Dr. Newman said they had been fooled once, don't let them be fooled again. The Committee should not be set up, but if set up it must be widened. Behind this, too, there was_ the amalgamation, to whioh he saw no objection if on business lines. The Government Bhould give the'- Bank of New Zealand the business in London sow given to the Bank of England. That meant .£20,000 a y<>ar. Mr. Buddo said the debate would injure the Bank. He was averse to any further assistance and to any amalgamation. The Bank had plenty of funds. The Committee should be seoret, and no larger than at present. Mr. Stevens said they had aoted in the dark last year, but even if the two millions were lost, it was better to lose it than to have had a orisis. The Estates Company last year made only £15,000 at an expense of £80,000. All the uncalled capital Bhould be called before the oolony was called on to assist. If the shareholders, who represented the wealth of New Zealand, did not find this money, the colony mnst not. Mr. Allen oorreoted an impression of Mr. E. Thompson, that the Leader of the Oppo. sition had been consulted and had oonenrred in the legislation of last year. The Colonial Treasurer had Baid that afternoon that Ministers knew a fortnight before the Bills were brought down all about the Bank, yet they were told at the time that the Government had only a few hours' notice. Members were chafing at having to follow the lead of a Committee whose tongues would be tied. Mr. Hogg thought it would have been in the interests of the colony and its financial institutions bad the remarks made that day been delayed till the Committee's report was bronght down. Seeing that the Bank of New Zealand's offioers had been the direst foes of the Liberal party, it was magnanimous that Government, instead of ondeavouring to injure the institution, should try to prop it np. Mr. Tanner refused to be bound by the recommendations of a Committee whoee investigations could not be complete. There was no pretence of urgency, and in a, ease of tbiß gravity the Committee should not aot without the fullest information. Mr. Pirani objeotod to the constitution of the Committee. A Boyal Commission, which could have got the assistance of experts out of Parliament, was preferable. The Government, with the knowledge at their command that Mr. John Murray had in 1888 over-valued the assets of the B»nk of NewZealand by £300,000, Bhould not have put their trust in him. Mr. E. M. Smith defended the aotion of the Government last session, and strongly advooated the establishment of a. State Bank. Mr. Button said that Mr. Murray, as General Manager, could not be held responsible for the estimates made by the Bank officers with regard to the value of its asset*. Moreover, property and other Bank asset* had depreciated since 1888. Mr. Pirani explained that his statements were based on a letter written by Mr. Murray himself. Mr. W. Hntobison said it was all very well for Mr. Bntton to defend Mr. Murray, but members should bear in mind that the member foi? Auokland was the Bank's solioi. tor. (Laughter.) It was not expedient that such a Committee as that proposed i-bould be •etup. The books of the Bank, so far as the assets were concerned, were a pack ot lies. The Premier enquired whether Mr. Smith would agree to the Committee being made eight inßtead of ten, as his amendment pro. posed. Ho personally disliked the Committee being secret, and would rattier have it smaller and open. Mr- J. G. Smith replied that he would ■ttok to the ten, as proposed. Meien, Heke and Carnorou alio ipok«,

The Premier regretted that many members tiled to appreciate their responsibilities. Ir. Montgomery's remarks were those of a onng man. The position was that unless bo Committee wore selected to-night othing oould be done till Thnrsday. The esponsibility of that lobb of time mutt rest n shoulders other than his. He would ask he House to paSB his motion, and he would hen give notice to add to it on Tuesday n accordance with the desire of the louse. They oould not do this now, is the praotice was that the Committee? if both Houses should be of equal numbur Phe Committee elected to-night could elect i chairman to-morrow and go into pielimiviry business, and the members to be added jn Tnosdny could join tbon. This was the jnly Boluti' n of the difiiculty they had got iuto. lv th« face of tho remaiks of members and thi-ir possible effect on the country Ihoj could not loavo the matter till 'I hnrsciay It was paint ul to liear members on butli aides making snub a, question one of Par'y waifare. lho mater bhoula have stopped with the Btatemont of his position by the Leader of the Opposition. The first intimation of the matter renewed by ftovetnment laßt year was an interview by Mr. Murray with himself and the "1 reasurer on a Monday. They asked Mr. Murray to put his requests in writing, and this he did on the Wednesday. On Friday they brought down the Bill. The House had seen fit then to appoint officers to the Bank, and have a New Zealand directorate, and the reports of these they now had. The colony was the largest shareholder in the Bank. Its interest amounted to two millions, while the interest of the shareholders amounted to £900,000, and it was the duty of the Government to protect that interest. The question of a State Bank should not be ntroduced at this juncture. As Sir Robert Stout had pointed out, to have a State Bank 3ontrolling the commerce of the country would be to have a huge maohine of politica jorruption. Ministers had carefully avoided asking anything aa to the Bank of New Zealand's accounts. All they had concerned j themselvea with was the investment of the seoond million. If the member for Ohristchnrch would withdraw hiß amendment, he would submit before Tuesday, by interim Order Paper, four additional names for the Committee. The Houbo should remember that the Bank had still one million left in liquid securities to meet any demand that might arise, and if such a demand should arise the responsibility would rest with members who had made Buch reokless speeohes in the House that day. In reply to Captain Rußsell, the Premier said the directors, through the President, made a communication to Government. A conference waa then held between the Government and the directors, aa a result of which the Government took its present aotion, with the assent of the directors. In reply to Mr. W. Hutchison aa to whether the crisis was co grave that the matter could not be postponed, the Premier said that if there were any crisis at all it would be one brought about by the speeches of Mr. Hutchison and other members. The amendment to strike ont the word " six," and substitute " ten," in the motion, was lost by 3ti to 26. Ihe division was as follows : — For the motion, 36. — Buddo, Cadman, Carncroßß, Camel], Collins, Crowther, Duncan, Flatman, Guinness, Hall, Harris, Hogu, Houston, Joyce, W. Kelly, Larnaoh, Lawry*. Maslin, M'Gowan, J. MKenzie, M'Laohlan, Meredith, Millar, Mills, Morrißon, O'Kegau, Parata, Pinkerton, Keeveß, G. \V. Russell, Seddon, E. M. Smith, Stevens, Ward, Willis, T. Thompson. For the amendment, 20.- Allen, Bell, Buiok, Buchanan. Duthie,|Earnshaw, Fraser, Green, Graham, Heke, W Hutohißon, J. W. Kelly. Lang, T. Mackenzie, Maasey, M'Guiro, M'Nab, Montgomery, Nowman, Pirani, W. E. Russell, G. J Smith, Stout, Tanner, E Thompson, Wilson. Pairs, tor the motion— Carroll, M'lntosh. For the amendment — Mitchelson, G. Hutchison. The motion was then carried on the voices.