THE BANK OF NEW ZEALAND

Evening Star, Issue 7750, 23 October 1888, Page 4

THE BANK OF NEW ZEALAND

THE HALF-YEARLY MEETING.

DIVIDEND AT THE RATE OF SEVEN PER CENT.

Auckland, October 22.

The half-yearly general meeting of shareholders of the Bank of New Zealand was held in the Banking house, Queen street, at noon today There was a fairly large and representative attendance. Mr George Buckley, president of the Board of Directors, presided. The fifty-fourth report of tho directors was submitted in printed form and taken as read. It was as follows; — The result of the half-year’s operations Is as fol-

Total £58,408 10 8 The Chairman, in moving the adoption of the renort. said: On this occasion we present to you our half-yearly report under exceptional circumstances. The bank has undergone a trying ordeal, and while the result in certain aspects has been reassuring and even encouraging, the conditions have been in some measure paralysing to our ordinary operations, and therefore unfavourable to the earning of a profit. You will, no doubt, scan the figures of the balance sheet with more than ordinary interest to see for yourselves how the bank has fared under the experiences of the last 12 months, and I now, without further preface, review those figures by wav of elucidation. An all-important feature in the bank’s balance sheet is the cash resources t is known to command. In this respect I think you will agree that the position is strong and therefore satisfactory. Our com in the colonies and cash balance with London bankers .mounts to £2,300,000, and the money at short “ London to £460,000. in all £2,760.000, besides £350/100 of bullion in hand or in transit. Such figures speak for themselves, I will only add that as compared with the last half-year there is an increase in the cash resources of £400.000. Iu deposits there is a decrease of Jqnn 000 which by itself is no doubt a considerfblVsum, but upon a total of some £9,000,000 is and in view of the circumstances in which the bank has been placed such a result is I venture to say, gratifying and even surorigin". Bills receivable are less by £BOO,OOO, which* a fluctuation due to the less active half Tv Vbfi veat when there are few or no bills cur■r<mt Ordinary advances are less by £150,000, a matter rather of chance than of necessity The larger apparent decrease shown in the balance sheU is caused by the amount written off. On ♦hewhole we have been doing less business and keening a larger cash reserve,--a policy SfpLed on us by a prudent jeg*rd *o existing conditions, but which as I have .Irfladv said necessarily curtails our earning Dower, otherwise lessened by the lowered value of money and less active trade, of which most of ii« are in one former another personally cogt The net profits for the half-year amount “ you see to £32,607 2s sd, out of which we propose to declare a dividend at the rate of 7 ner cent, per annum, absorbing £24,500, and Wine £BIO7 2s 5d to be added to the amount carried forward,’.which will then stand at £33,068 10a 8d The Bam available would have admitted of a higher dividend, but it must be borne in mind that we are yet in the convalescent stage “ d will do well to go soberly. This outcome of so large an aggregate of business as our balance sheet shows would be discouraging if our ftgßefcfl were available for earning a profit, which unfortunately they are not If they were we should have wuoh more satisfactory results to set before you, and we hope ere long to attain -that gratifying position, because it will be our immediate care to realise these unproductive assets as speedily as it may be done with advantage, and make the proceeds available to the very material increase of your returns. We believe we shall bo assisted in this by better times and brisker trade, of which there are SSy palpable signs. You will have observed Settlement on public lands has of late been more active than for many years past. There is a noticeably increasing inquiry for property, while sales have taken place at prices something more than encouraging. From any such improvement in the general state of the colony Jon may hope to profit in a double sense-more oLyour resources will be let free for legitimate employment, and employment for them will oe more remunerative. I need hardly add that we phftll not neglect to see what can be done to increase the net profits by ladtcious retrenchment and concentration. You are awarethat it is proposed to increase the capital of the bank, and yea have been fully informed of the reasons for this step. We are glad to beableto say that we have satisfactory assurance that the capital will be readily taken up. Sir Frederick Whitaker seconded the motion for adoption of the report and balance sheet. He thought that shareholders might fairly be congratulated upon the report that had been read and the observations of the chairman. There was no doubt that the bank had gone through a great ordeal, and he questioned if there were many other institutions of a similar character that would have faced- the same ordeal, and come out of it with the same success. There were one or two questions in respect to which he would like to draw attention briefly. The first was with reference to the profit and tow account. They would find then that the net nroflts during the half-year amounted to £32,607 S! 5d This sum would have enabled the directors to declare a mnch larger dividend than that given, Sit on the whole he thought they would agree with him that it was most prudent to pay a smaller dividend and carry » Urger amount forw«d to the next half-year. The amount earned forward was £33,968 10s Bd. If they won d look at the statement of accounts they would find that the coin and cash balance at the bankers, money at short call m London, and bullion on hand and in transit—which meant assets to hand when required—represented a much larger sum, and placed the bank m a longer position. These facts were worthy of *°Mr Header Wood thought the report was coite satisfactory—perhaps more so than could Sve been expected by the shareholders after "n that had taken place with reference to the bank But what a commentary was this report Sthe numerous delightful reports whidh shareholders had at various times re™sved assuring them that every bad and doubtfnl denendency had been fully provided for; thatf reserve fund hatevervthin* was strictly sound and secure. Yet by sarwcrsrss

at tho enormous character of the loss which the bank has sostaine ™ Ho thought that for many reasons it was unfortunate they should know nothing of these losses. The directors had declined to give any details of this loss or to tell shareholders how it had come about. He thought that was the more unfortunate, because in the few details that had come out they did not fairly represent the facts. There was one detail which the president gave them the other day which required further examination. He referred to that part of the president’s speech in which he stated that “ that there was one account, named James Williamson, overdrawn share account, £16,170, one of the loss accounts.” Now he fancied that it must have occurred to almost everybody who had heard these words, How could it be that there was a loss account of £16,170 through the late James Williamson ? for surely if the account was overdrawn to that amount his estate was liable, and all the directors had to do was to come down on the estate. Yet it had been telegraphed throughout the whole colony that there was some loss through the late James Williamson’s share transactions of £16,170 to the bank. Yet it would be found upon examination into this matter, if anybody took the trouble to examine it, that the late Mr Williamson’s share account never was overdrawn £16,170, that he never had £16,170 of tho bank’s money advanced to him for any share transactions; and that the bank had not lost a single sixpence by Mr James Williamson, but that on the other hand the bank had £16,600 of Mr Williamson’s money which Mr Williamson found it very difficult indeed to get out of the bank. Now, was that a fair statement of the transaction ? He had seen the correspondence, and could say that it would support the statement which he had made. He simply mentioned it because he was sorry the good name of a gentleman like Mr James Williamson was traduced in the manner which it had been—a gentleman who had occupied such a position in the colony and also in connection with the bank—a gentleman who unfortunately was now dead, and could not speak for himself. He had therefore contradicted the statement in the report of the committee in the hope that it would receive the same publicity which had been given to the report—(Applause.) Mr Rose said that no doubt many of them were aware he had for many years been tho representative of Mr Jas, Williamson. He could therefore vouch for the accuracy of Mr Reader Wood’s statement. He thought at the time that the chairman’s statement was made that it was very objectionable. Ho knew that the general impression in town was that £16,170 had been lost through Mr Jas. Williamson, and he could state that, as representative of Mr Williamson’s estate, they were quite willing and proposed to meet in court any attempt to recover that money.—(Applause.) Mr Law rose and said that perhaps it was well that tho meeting should know that he was that disreputable individual as they had been told, the late manager of the branch of the Bank of New Zealand at Adelaide. He was the man whom the report had held up to all as having recklessly squandered the money of the bank. But he should have more to say with regard to that later on. He was there to defend his character, but he did not wish to trench upon the question raised by Mr Reader Wood, although he must say that his name had been mixed up with figures amounting to £BOO,OOO, figures of which he knew no more than the man in the moon. But he would not deal with that until Mr Reader Wood had been dealt with. He thought with that gentleman that they ought to have laid before them a clear statement of losses. It ought to be laid on the table by the directors, and he asked that it shou.d be done. It was absolutely necessary under the deed of settlement that this statement should be laid on the table. He had further remarks to make, but at that stage he would ask that tho statement should be laid on the table, and deal with other matters afterwards. _ The Chairman asked that the question should be repeated. He had nob quite caught it. Mr Law said that he saw that there was in the deed of settlement a clause No. 118, which made it absolutely incumbent on the directors to lay upon the table a full statement of what the ioiaes were. Now, he asked, and ho supposed it was what Mr Reader Wood wanted also, that a statement of those losses should be disclosed to the meeting.—(Mr Law here read clause 118, which is to the effect that in tRo event of the losses being equal to one-half the capital it should be incumbent on the directors to report fully the losses to a general meeting of shareholders). What he said now was that they had no such statement, and this loss of tJßflo,ooo with which his name was linked together in that disgraceful report, for he did not hesitate to call the report disgraceful; well, they had not those losses disclosed, and that clause made it incqmbent on the directors that it should be done. They were entitled to it, for it was their The said that fortunately their losses were not yet equal to one-halt the That is going boyond the question altogether. . . ~ t Mr Justice Gillies explained to Mr Law that he had not understood the meaning of the clause in the deed of settlement. It said thatsuch and such should be done if onc-hslf of the capital was lost. Well, one-half had not been lost. Mr Law: I beg your pardon. Mr Justice Gillies : I don’t know whether Mr Law is as good a banker as he is at construing this deed of settlement. Mr Law said that he must thank the previous speaker for bis gratuitous information and explanation of the clause, but he might toll him that it was imperative that they should lay that statement upon the table, and he for one would have it. ....... The Chairman explained that the losses were only £300,000. Mr Law: That’s near enough. The Chairman said he must appeal to the shareholders.' Mr Law had already occupied some time. He might say that they had mot Mr Law on Saturday with reference to the bank’s affairs in Adelaide. He might say that Mr Law objected to having been dismissed two years ago. Mr Law: I still 4° Bo> The Chairman said they had of course’declined to go into that matter. There were statements in the report that Mr Law desired should be contradicted. He might state that the committee had devoted tho whole of one week to going into that matter. They came to the conclusion that in Adelaide money was squandered in a manner that could only be considered reckless and disastrous He had asked for an explanation of two items' and the only reply they could get was that he had beep deceived, and consequently a loss had resulted. Such answers fully confirmed the committee in their first opinion about these two transactions. Mr Law said that they had heard the lucid ;jnd able explanation of Mr Buckley, but he had not answered his request with regard to the statement of lessen. He had referred to his (Mr Law’s) conduct in Adelaide, and he might state that he was perfectly prepared to go into that in the fullest possible manner, in order to explain anything, and failing that he was prepared to explain matters in a court of law. If he could get justice in no other way he would get it in a court of justice at »U events. The point they were at now was what it was incumbent on the directors to do, and he took it that it was their duty to prepare and lay on the table a statement of their losses some of which were now denied. As regarded the figures relative to Adelaide he could deny that any blame attached to hfm jo any shape or form, and he now referred to losses that it was possible to avoid. As he had said, if he vas forced into that position he would fight the matter out in another sphere. He had met the directors in an honourable manner and he appealed to Major George, Gaptain Colbeck, and others if that was not so; and now he was prepared to go over the whole subject again. What they wanted now was a statement of the losses referred to by Mr Reader Wood and denied by this other gentleman. Sir F. Whitaker said he would like to draw attention to the fact that this was not the business before the meeting. They wore not there to inquire into the losses in Adelaide or whether Mr Law’s management had been good, bad, or indifferent. But looking at the erroneons way in which Mr Law had read the 118fch clause in the articles of association he did not wonder at him making a good many mistakes elsewhere. Now, had been done by the directors ? They were not aware that such losses had occurred, but believed after the closest investigation that there were such Josses. In view of this fact, and finding that there was an evident want of confidence in the concern, they recommended that a committee of inquiry should be appointed. • The shareholders took the same view of the matter and approved of this .course. The committee were therefore appointed. They had reported, and their report had been acted upoo. Now, not only was it a fact that they were unaware that such losses had occurred, but it was also a fact that the statement that they had lost one-half of the capital was not true. If they would look at the report they would see that the bank premises and landed property were set down at £373,000, so that it was a question, in point of fact, whether a loss had occurred if the assets referred to were favourably realised. This, however, was not a subject for consideration to-day. The report of the Committee of Inquiry had been read and acted upon, and that was past. With regard to Mr Law, he would just say they had given him a great concession in allowing him to speak half a dozen times at a meeting of this character. A man was allowed to speak onpe, and if every man was to be allowed to speak as often as Mr Law, he would like to know when any such meeting would come to an end. Ho would have calledjattention to this matter before, but

bo know Mr Law had a grievance and was unwilling to interrupt, but as Mr Law had had bis say half a dozen times the time had come when the meeting should confine itself to its proper business—viz., observations upon the report read to-day. Mr Law said be quite agreed with the remarks of Sir F. Whitaker, and thanked him for the consideration which he was pleased to make. In his remarks he (Mr Law) had no wish to traverse matters outside of the proper domain, and he had an objection, except in a kindly and friendly spirit, to express his views as to whether he thought matters had been fairly and justly dealt with. He had come a long way, and he thought he had a right to be heard. He was prepared to go through these matters thread by thread, and he was prepared to move that the report be not read, that it be not approved of by the shareholders or by anyone until the directors, under clause 118 of the deed of settlement, had done what was incumbent upon them. It was not a matter of will, a mere freak, or what they thought should be done in the interests of one or another. A man scarcely knew whether his own account had a balance or whether it had not. He pressed his motion that this report be neither read, received, adopted, or entered into until the directors had fulfilled this clause 118 of the deed of settlement, by which it was incumbent upon them to lay before shareholders a full list of tho bank’s losses. They had heard from a gentleman, who he (Mr Law) did not know till then, that he represented the late Mr James Williamson, who for years occupied a distinguished place in the counsels of the bank. Although Mr Williamson was not there to speak himself, his name was handed down to them, and what he had done should not be forgotten. His representative now present, who was a younger man, challenged the statements that had been made about tho deceased gentleman, and all he (Mr Law) desired was to go into facts in the light of truth, as he wanted to be judged himself in relation to affairs at Adelaide. This gentleman had openly challenged them so for as Mr Williamson’s indebtedness to the bank was concerned, and he said that the items referred to in this way were not true. He moved—“ That the report be not adopted until a full and complete list of the losses of the bank has been laid before the shareholders in accordance with clause 118 of the deed of settlement.”

Mr Cherry seconded the amendment. He believed that shareholders had a perfect right to know where their losses were sustained and by whom tho money was lost. It was not a question of looking into accounts that were still running. The directors in a public company had no right to say to shareholders “ You jshould know no more than we choose to tell you,” and he contended that every shareholder had a right to know by whom these losses had been made. It had been stated that their losses did not exceed halt the capital, but taking two years ago, and from that time till now he found the amount of their losses was £993,500, At a previous meeting he had stated that the amount in round numbers was close to a million, and if his figures were disputed he would prove each item from the books—if anybody said that they had not lost a million of capital.

Captain Colbeck: I say that we have not lost half the capital. Mr Cherry said that, leaving that question on one side, shareholders had a perfect right to have a list of their losses. If the directors did not wish to publish them to the world they could ask the reporters to withdraw, or if any man published them in the papers ho could do it at his own risk. He intended to ask another question in any case before the report was adopted. He was going to ask whether the position of auditor was a purely honorary position or whether the auditors were paid. The President: The auditors were paid £ijQ per annum, Mr Cherry: Indeed! Then in that case £SO was presented to two gentlemen for auditing the accounts. If they had audited the accounts they surely must have known that the balances shown and placed before shareholders for the year were not correct and not justified by what had turned up. Now, it appeared that the auditors were paid £SO each as a gift. That question was raised some years ago at a bank meeting, when he (Mr Cherry) asked what were the qualifications of an auditor. He received answer that it was necessary to hold 200 shares. The position of shareholders was this, that they knew a number of fellow shareholders by sight, but they did not know which of them had 200 shares. This was only known to a select circle, and the office of auditor was simply passed about from one to another. He also wished to ask whether there had been a system of passing shares from one to another to qualify for directors and for auditor. He thought it quite possible, seeing the way in which things had turned out.

Mr Edwin Hesketh said he would net have risen except for the remarks that fell from Mr Rose and Mr Reader Wood. He did not intend to advocate laying before the meeting any statement of losses, but with great diffidence he would venture to suggest what, in bis opinion, was the meaning of the deed of settlement. It appeared to him that the object of the clause was—reserve fund or pot—if there was a loss equal in amount to £500,000, a statement of particulars of it should be laid before the meeting of shareholders.—(Hear, hear.) There was a reserve fund.it was true, quite sufficient to pay the whole of these losses; but if so large a loss had been made be would with great diffidence mention the view that tlicy were entitled to take this clause to mean : that if so strange a loss had been made a statement should be laid before shareholders, no matter whether there was a reserve fund out of which it could be taken or not. Shareholders were entitled to this, for the simple reason that the clause does not say “if half of the subscribed capital is lost,” but if losses have been equal in amount to half of the subscribed capital.” Then, when they went a Utile further into the clause, they would find that at a subsequent meeting power was given for the meeting to write of losses—from what? From capital. The opening clause stated that losses which had been sustained equal in amount (it did not say anything about reserve fund), and he ventured to repeat that the view he had taken was the proper reading of that clause.—(Hear, hear, and applause.) The President said that with respect to the question raised as to the meaning of the 118 th clause in the deed of settlement he thought that shareholders oould answer for themselves, and that meeting could see that it was merely a matter of opinion on the part of two or three gentlemen as to how the clause should be read. When the Attorney-general and others, who ■wore learned in law, bad given quite a different opinion to that now put forward, he did not think that it was for the meeting to decide upon. He might say, however, that he bod carefully read the clause, and that he did not think it conveyed the meaning suggested by Mr Hesketh, If the latter was correct, they would have to do everything over again de now.—(Mr Law; “Yes; of course”) He understood that the losses were what remained after deducting the reserve fund and profits. If they did not deduct profits, how could they come to thjs loss ? and the reserve fond wag merely reserve profits which bad not been paid away. He thought it Was as clear as could be, and that the questions raised were only a quibble. However, he did not think it was for the shareholders to decide such questions ; it was a question for the solicitors of the bank, and they were not present. He was sure in his own mind that the clause was never intended to operate in the manner indicated. He granted that if their loss had been half a million after deducting the (reserve fund that would be another matter, but the loss was not half, but less than a third of the subscribed capital. . Mr Law here rose to address the meeting, but was assailed by cries of “ Order ” on all sides, and resumed his seat without having had an opportunity of indicating what he wished to say. The President: With reference to Mio remark made by Mr Cherry, be i, lieved some resolutions were to be brought forward with reference to a change of auditors; that would be the proper time to go into the matter of auditors and of their qualifications. With reference to previous balance sheets, whether they were right or wrong that was no business of the directors. The balance sheets were certified to by certain persons who were responsible for them. Neither was it any business of his own (the president’s) as to the loss being one million. If Mr Cherry would refer to what had taken place at the previous meeting held on the 12th Inst., he would see that he (the president) stated distinctly that the loss now reported upon and previously written off did amount to about one million, and that he gave details places where the loss had occurred. 1 The amendment moved by Mr Law was then put to the meeting, and negtatived by about 30 against 7. . . The president, before submitting the motion for the adoption .Qf report and balance sheet, said he desired to reply to some (remarks made by Mr Reader Wood to the effect that the committee declined to go into details. The committee had given in their report all details that oould be given, and had explained how losses name about as particularly as they could. Were they ejpeptpd to go through every item, X B C and so on through the whoje alphabet, A Voice: No; but yon can publish the names. The President added that as for publishing the names they oould not do so under the terms of the deed of settlement. As regarded Mr Williamson’s name, he was sorry that any remarks he had made should have been taken as reflecting on him. He simply referred to the share account as he found it in the bank. The remarks he had made were these (quoting from

the newspaper report of Lis speech)“ We found in the accounts 0110 named James Williamson, share account overdrawn £16,170, one of the loss accounts. We, of course, inquired into it and wo found that two or three years ago it was resolved to transfer some shares belonging to certain persons to the London register.” He had then gone on to explain about this share account, and would not take any notice of the means, because it was well known it was an illegal action and prohibited by the Bank Act, and must have come out some time or another. He then said (quoting again); “ But this is not all. These shares and some others, including the shares the bank bought, were supposed to be sold pro rata, and in fact some of the parties, including the Loan and Mercantile Company, got their share of the proceeds, but for some reason the late Mr Williamson claimed first slice —a claim difficult to allow, because others already had their share. However, he ultimately got it at your expense, because he got the money at the rate of about £2l per share, and now you have the shares.” Mr Wood held that the loss was through the bank’s blunder and not through Mr Williamson. The shares referred to, sold by Mr Thomas Russell, were Mr Williamson’s shares. The President said he had explained that they were to be sold pro rata. Mr Wood; Then why did Mr Williamson not receive his pro rata quota ? The President: He would have received it.

Mr Wood: But it wan never offered to him. The President said the matter in dispute between Mr Williamson and the bank as to whose shares were sold was referred to the board and they declined to give a decision, but the money was afterwards paid out of the bank to Mr Williamson. It was proved on inquiry that the money was paid by the general manager and he said he paid it by authority of the board. The minutes had, however, been searched, but no record of authority could be found. However, that matter would be settled hereafter. Now, he asked did that in any way reflect on Mr Williamson except that he got his first slice out of the shares instead of pro rata 1 Mr Wood asked why in that case they did not recover from Mr Williamson’s executors ? Instead of Mr Williamson getting the proceeds of the shares he got nothing, and would have had nothing to-day unless he had threatened the bank with a writ. The President replied that they had examined the records of the bank and found no record of this. If Mr Williamson threatened to issue a writ he should have done it. The whole thing was complicated. The bank had got mixed up in it, but they had no right to be concerned in it as it was an illegal act. Their duty as special auditors was simply to make a note of it. This they had done, and it would be inquired into again. All he would say was that he did not intend to reflect on Mr Williamson in any way. The motion for adoption of the report and balance-sheet was then put and carried with only one dissentient voice. MR law’s GRIEVANCE. Mr Law asked whether they did not think now that the half-yearly report had been adopted that they should have the report of the losses before the meeting. He did not wish to interrupt the meeting, but he was very anxious that the board of directors would proceed with the business in a proper way.

The Chairman ruled that Mr Law was out of order as his amendment had been negatived, and asked the meeting to support him in his ruling. Mr Law claimed that he was perfectly in order. His amendment was that the statement should be submitted before the report was passed. Now that the report was read ho was in order in asking that that statement of losses should be submitted.

The Chairman again interrupted Mr Law, and, calling him to order, said he did not see why the time of the rqeeting should be taken up in this way. Mr Law continued speaking while he was being called to order, bat was stopped by cries of “Chair!” QUALIFICATION OF AH AUDITOR.

Mr A. Board man then rose to more the resolution of which he had given notice at the last meeting relative to the qualification of an auditor. They would all know what was meant by these resolutions. His object was to place the bank with regard to audit in the same position as all other joint-stock companies with which he was associated. He had examined the articles of other institutions, and in none of them was there a clause providing for qualification of an auditor, that he should bo the owner of gat least 200 shares. This meant that no man would be appointed an auditor of the bank unless he held bank stock to the value of £2200. He had searched the bank returns for a good while, and found that in Auckland there were very few shareholders outside the present and past directors of the hank who held more than 200 shares. 'He doubted if there were even six or seven outside those he had named who held that number. His proposal was that the whole of the 95th clause in the articles of association should be omitted, and a new clause notifying the qualifications for an auditor substituted. His proposal was similar to the rule in the Loan and Mercantile Agency Company, New Zealand Insurance Company, South British Insurance Company, and similar institutions, and was nothing of his own. If his motion was carried he would propose other resolutions altering words so as to adopt the third and fourth clauses to this new article. Mr Boardman then moved, re clause 95—“ That the whole of clause 95 be omitted and the following substituted therefor;—‘The auditors need not be members; but no person shall be eligible as an auditor who is at the time of such election interested otherwise than as a member in any transaction of the company; and no director or other officer of the company shall be eligible during his continuance in office.’ ” Mr O’Neill seconded the resolution. The President said there was no doubt that efficient audit was a delicate question, more especially when the bank had branches all over the world. Ho would read to them what he had to say on this subject. The president then read as follows:—The object of Mr Boardman’s proposed alteration is to give shareholders greater scope in the selection of auditors in the hope of securing a more elaborate audit. The need of this depends upon what the functions of the auditors are held to be. The business of a large bank, '.having numerous and widely scattered branches, obviously cannot be effectively audited by even professional accountants who devote only a short time to the work and are remunerated with £SO a year. Nor is it matter of audit that has been the trouble in this bank. The losses by fraud or dishonesty have been very exceptional, and on the whole trivial, and such as they have been the auditors would not have discovered them. Tho gentlemen who have acted as auditors appear to have adequately discharged the duties prescribed to them under the- 99th clause in the deed of settlement. There is no question of the incorrectness of boohs or balance sheets of the bank. The balance sheets certified to by these gentlemen were correct as set forth from the books and returns by which the auditors (even professional accountants) must go in verifying the balance sheets; because even if it were contemplated that they audited the branches—which it evidently is not—they could not possibly visit them all simultaneously so as to verify to correctness of assets at one given date. If the idea is that the auditors would value the securities and detect bad debts, a very little consideratidn will show that this is quite beyond the scope of such audit and the power of such auditors as the deed of settlement provides for; nor could professional accountants do it unless they became permanent officers of the bank, devoting their entire time to the work, It was the duty of the directors to provide for supervision of this sort. They may fail in their duty, but so might auditors appointed directly by shareholders. The directors are in fact, and must necessarily be, representatives of shareholders in this matter. It is the business of shareholders to appoint efficient directors. If they fail to do so they will not mend matters by appointing auditors to do the work of directors. The practice of all large banks with numerous branches is, as it necessarily must be, to entrust this part of their business to directors. In America the Government exercises a certain supervision, but there the system of banking is different wd lends itself to Government audit, although there are plenty of instances to show that, as compared with the English system, Government interference in America does not secure shareholders against heavy losses. While, no doubt, the alteration proposed would be attended with much advantage, we think that the qualification for auditor is too high, and we bad in view several alterations in the deed of settlement which we think desirable, but have hot thought this is a suitable juncture to discuss them. If Ur Boardman is disposed to withdraw his motion for the present we undertake to go into the subject at the nest halfyearly meeting, and to bring it up with the other alterations I have alluded to for consideration of shareholders. I will only add that, of course, if these alterations are carried they cannot .acme into force till next year.

Mr Boardman said he would be happy to fall it) with the views of the chairman in any way. He had purposely abstained from the question whether the audit of the bank had been efficient or not. The point with him was whether the audit should be confined to four or five outside the past and present directors. He, and indeed everyone else about town, felt strongly that the present system was a perfect farce, and that such a clause as this should he expunged as soon as possible. In bis investigation of the articles of association of companies he never saw such a clause. It simply prevented efficient audit. In London now It was the custom for chartered accountants to audit the accounts of public companies, and confidence was thus inspired. He hoped the

directors would meet the shareholders fairly—uot only the shareholders here but in South Australia and England, and take measures so that the audit should not be tied up. He asked them to remove this objection, seeing that they have co-partners in the concern. He had great pleasure in accepting the assurance of the president that the directors should take the matters into consideration, and with the permission of the meeting he would follow the suggestion made to withdraw the resolution. THE CHARGE OF FALSEHOOD. Mr Murdoch said thatat a previous meeting remarks fell from the chairman, and at the time he had only a hazy recollection of the matter which was referred . to, therefore he could not venture to make a reply. The meeting on Friday last was called for a special purpose, and he could not venture to introduce what would probably bo debateable matter on that occasion ; therefore he took the earliest opportunity to reply to the remarks in question. He would take this opportunity to refer at length to a reassuring telegram sent to London about this time last year after the bank’s half-yearly meeting. He was not the author of that telegram, but he recognised it, and would assume his share of the responsibility. It was sent on the best information at the disposal of the bank, and with the object of lessening the excitement in London, which must have proved very much to the detriment of the interests of the bank. It was not sent in consideration of the assets of the bank, as if the bank was going into liquidation, bub as a reasonable estimate of the position at that time, and of necessity especially pointed to the condition in case of a revival. Now, he thought they would admit that not only had no revival taken place, but that the depression which had existed a year ago was up to the last week or two much more pronounced; therefore there was no possibility of a recovery. But the statement made by the president to this meeting was that this statement in the telegram was a deliberate falsehood, and no one knew that better than the directors and general manager. Now in all fairness he would ask the president to remove the stigma from the gentlemen who occupied'the position of directors at that time, and from himself. He did not ask him to credit them with great judgment. He could blame their judgment if he liked ; but all he asked was that the president should remove from them the imputation of untruth.

The President, replying to Mr Murdoch, said that when he made the statement referred to he spoke a great deal from memory; but he had obtained a copy of the cablegram referred to, and he held it in bis hand now. He had thought that cable a great deal more favourable than it really was—at the time he was speaking from memory. But since then he had obtained the copy itself. It was now before the meeting, and any of the shareholders might see it. He would read it to them. It was as follows: “We have no fear of trenching heavily upon reserve fund.” There it was; there was no mistake about it; none. With regard to Mr Murdoch’s farther remarks he could only say that with his knowledge as a shareholder at that time be did not believe it, and now that he had fully gone into the matter as a member of the committee he had no reason to alter his view. Either the general manager or directors were grossly ignorant of the actual state of the affairs of the bank at the time the cable was sent Home, or the (statement was untrue; therefore he positively declined to withdraw one word that he had said as he believed still that it was a falsehood.

Mr Murdoch said with regard to the matter the chairman could not say in truth that he was not afforded an opportunity of denying what he called a malicious libel. Now, with regard to the cable referring to the Fatetere Company, and the very mixed manner in which the chairman referred to the floating in London of that company, and of certain large commissions which were paid. Now, he asked any gentlemen then present who was in that room last Thursday whether tho} did not receive the impression that the money for the floating of that company and the payment of commission was not obtained from the Bank of New Zealand ? At that meeting he could not fully remember ail the circumstances connected with the floating of that company, but since then things had come back slowly to his mind. The bank had made large advances to certain constituents on the understanding that the company would be floated in London. At the last moment it appeared that floating the company would prove a failure unless certain shares were taken up by colonial proprietors. Rather than let tho company fail advances were made to enable the proprietors to take up those shares. As to the floating of the company, the bank in London had nothing to do with it. It was floated by the “ limited circle ” which the chairman bad been intimately associated with for many years, and very large commissions were paid to members of that limited circle. He only wanted to remove from the bank the reflections which the remarks of the chairman conveyed in his relation of that circumstance. The President; I ask Mr Murdoch to explain my connection with the “limited circle” referred to by him. I should like the explanation, as I had nothing to do with it. Mr Murdoch said he thought his statement was quite distinct. He then repeated his previous statement. The President: I wish Mr Murdoch to explain fully. There pan be no objections. I suppose yon are not under any obligation to secrecy in the matter. Mr Murdoch said he thought there would be an objection. The President said he thought ho was entitled to an explanation, but since Mr Murdoch would not give it he could only reply generally to what had been said. Now, in regard to tho Fatetere Company, it appeared to him, so far as he was able to judge, that perhaps it would have been better,if the company had never been floated, for the bank stood to lose £70,000 by that transaction. However, he did not withdraw anything he had said with regard to that company or the limited circle. They all knew how companies were floated, how some persons were paid at the time to take up shares. He believed that the Fatetere Company was' attempted to be floated by the Union Bank, and he had heard that a member of a firm with which he had once been connected had taken up shares in that company. He referred to the firm of Dalgety and Co. Ho had, however, had no connection with that gentleman for many years. That was, however, the only way in which he pould be connected by Mr Murdoch in the matter. He was, if he remembered rightly, in England at the time the company was floated, He did not then know much about the company, but he had beard that some parties were paid big commissions, and that they were paid by the bank. He had not anything whatever to do with it, and had had no connection with the firm of Dalgety and Co. for many years. DIEECTOK. There being no further discussion, Mr Browning proposed that Mr John M'Lean should be elected a director of the bank, he being the only candidate. This was seconded by Mr A, K, Taylor and adopted unanimously. AUDITOES. On the motion of the President, Mr J. L. Wilson and Mr R. McDonald Scott were elected auditors for the ensuing term. Mr Wilson thanked those present for his election and referred to the good work done in the past by the retiring auditor, Mr G. P. Pierce. He said that some persons were dissatisfied with the auditing, thinking that an auditor should visit branches and be acquainted with all details. That was clearly an impossibility. Some, on the other hand, seemed to think that all the auditors had to do was to walk into the bank, shake hands with the inspector, and then the thing was done. That idea was erroneous. He could tell them that accounts had to be examined very faithfully. He bad himself fallen upon troublesome times when a large amount of work was involved. Mr Lew said that being all the ordinary business he should like to ask the directors if they intended to give effect to the latter portion of clause US of the deed of settlement. He referred especially to the calling a general meeting of shareholders in the event of it being found that £500,000 of the capital of the bank had been lost. He considered that the Special Committee should also have associated with them the ordinary auditors and the two special auditors as provided in the deed of settlement. Mr Law was proceeding to recapitulate his previous remarks upon clause 118 of deed of settlement when he was interrupted by The Chairman, who said: Mr Law, I would ask you to keep your legal adviser’s opinion qpop the ;mqtter as we wish to proceed with the business before the meeting. Mr Justice Gillies moved a vote of thanks to the staff of the bank for the great labours they had undergone, more especially during the past six months. This was seconded by Mr R. M'Donald Scott. The motion was then adopted. Mr briefly returned thanks. He then' readHhe rough minutes, which terminated the business.

Net profit for half-year ended 29th SepTowhich has to be added the from half-year ended Slat March £32,607 2 5 25,881 8 3 1888... MpWnfr a total available of.,. £r>8 ’‘ 468 10 8 Wbieh it is proposed to appropriate as follows: „ To the payment of a dividend at the rate of 7 per cent, per annum Balance carried forward ... £21,500 0 33,988 10 0 8