BANKS & THE PEOPLE

Evening Post, Volume LXXX, Issue 5, 6 July 1910, Page 3

BANKS & THE PEOPLE

« VARIOUS THEORIES. DISCUSSION IN THE HOUSE OF REPRESENTATIVES.

j Banking history, ancient^ and modern, was quoted fairly abundantly in the House of Representatives yesterday when the Prime Minister deposited the [ annual accounts of the Bank of New : Zealand!. Mr. T. E. Taylor raised the question 1 as to whether the time had not come for reconsider-ing the country's relation to the Bank of New Zealand. So far as [ could be ascertained, tho Bank of New Zealand and the four other banks doing business in New Zealand were drawing £600,000 a year from tho people of New Zealand, after paying all expenses. That was equal to 4 per cent, interest on £15,000,000, but the banks had not that capital. They were practically carrying on their business with the free deposits of the public. The people had already an interest in the Bank of New Zealand to the extent of £500,000 and the I £1,000,000 guaranteed a few years ago. j Why should not this interest bo convert- ; ed into a share interest, thus constituting the bank a State bank, as it was now, in a measure? The public shocld bo the senior partner, not the junior one, as at present. The nationalising should be done before the bank built up a reserve fund big enough to buy out the million guarantee. It was a most unfair thing that the ordinary shareholder should get 12£ per cent, now while the people of New Zealand got only BjJ per cent, on their £500,000. He wanted to see the enormous profits finding their way back to the public instead of going to those comparatively few shareholders who called themselves the Bank of New Zealand. Mr. H. G. Ell said that the original shareholders, who paid heavily for their holdings, deserved sympathy, but there were others whose shares cost "a mere song." What about- the shires sold for 10s, and for 265, and for £2 6s? Mr. A. W. Hogg_ blamed the banks for the recent financial stringency. There had been plenty of money in the country, he said, but it had been locked up. Farmers had been "placed in an abominable position." Mr. G. W. Russell said that the total capital of the bank v/as two miilio^i pounds — namely, one million 4 per cent, guaranteed stock, and £500,000 preference in shares belonging to tho State, •which might be described as the State capital. There was also the private capital of the shareholders — namely, £500,000, being 150,000 shares paid up to £3 6s 8d per share. The net profits of the bank for the year ended 31st .March, 1910, were £314,385. Of this sum the State received on its £1,500,000 capital the sum of £83,750, made up 'thus — 4 per cent. on £1,000,000, £40,000; 8f per cent, on £500,000 preference shares, £43,750. That was all the State received on £1,500.000. On one-third of the same amount — £500,000 of private capital — the shareholders secured the following profits : — 10 per cent dividend, £50,000; bonus, 2i per cent, £12,500; written off bank premises and furniture, £15,000 ; carried to reserve fund as accrued capital, £150,000; total, £227,500. THE PREMIER'S REPLY. Sir Joseph Ward closed tho discus- | sion, temporarily, with a statement that I it must not be forgotten that Parliament could not control the shareholders of the Bank of New Zealand in the way that some members thought. The shareholders could declare themselves entirely free, ask for a charter, and retain, their business without consulting Parliament. The theory that members, by Act of Parliament, could compel the Bank of New Zealand to do certain things was an erroneous one. It was quite true that Parliament could estab. lish an independent bank; that could be done to-morrow, but it was quite a mistake to suppose that Parliament could force the bank's shareholders willy-nilly. It had to be remembered that the State was represented on the directorate, and had control of the auditing. The bank might have been bought right out years ago by the State, but some of the members of that time were "as timid as hares," and some advised a course that would have involved financial chaos. There would be other opportunities to discuss this banking i l)ic, :