BANK OF NEW ZEALAND ACT.

Lyttelton Times, Volume CXVIII, Issue 18572, 26 November 1920, Page 6

BANK OF NEW ZEALAND ACT.

TO THE EDITOR. . Sir, —Though no time .or opportunity was given to the Press or the people* to criticise the Bill before it was passed there is any amount of time to criticise the Act, t 9 protest £tgainst it, and the way in which it was rushed through. Mr Milford said that Parliament was not responsible—the blainc was all on the side of the Government. But what was there to prevent Mr Wilford or any other member from moving that the Bill be postponed till next session, and dividing the House? The .eight members wno voted for Mr Holland s State Bank amendment are the only ones not responsible for the rush. Considering that we have . a public debt of about two hundred millions and that ’ millions are urgently needed for the soldiers, for house building, and bo many other things, was this a time to give more capital, profits and privileges to the ordinary shareholders of the bank ? Last year these shareholders got a dividend or 17? per cent, amounting to £175,000. Instead of a war bonus they ought to have paid a war profit! tax' on their dividends! Mr Wilford asked Mr Massey, “ What the shareholders were getting?” Mr Massey said they were getting their share, but from our point of view it is a very fair arrangement. That is the question; The Explanatory Memorandum attached to the Bill says ” Before the passing of the Bank of Now Zealand Act, 1913, the Governtnont bad no share in the profits of the bank, except on its £500,000 of preference shares?” But the Government ought to have had just as large a share of profit, on the £2,000,000 of stock it guaranteed for ten years, m 1894, and on the £1,000.000 it guaranteed afterwards for another ten years, and on its so-called preference shares, as was given to the ordinary shareholders. According to the “Gazette’ of March 31, 1913, the paid-up capital of the bank was £1,000,000 of guaranteed stock—no dividend; £500.000 Government shares, £50,000 dividend and £500.000 capital payable by shareholders, £75,000, reserved capitf.l, £1,240, 000. Considering that except the very limited dividends not more than 10 per cent on the preference shares the Government had had “ no share in the profits of the hank before 1913,” and that all the other profits had gone to pay off the liabilities of the ordinary shareholders, the Government might justly have claimed the whole, of the reserve and undivided profits for its own share on the guaranteed capital. But in the 1913 Bill, the ordinary shareholders actually had the audacity to call themselves “the proprietors of the ;jbank” and had inserted a clause which the Hon Mr Allen cut out because if it had been passed by the House, the Government’s interests in the referred' capital would have “gone’'—(to the ex-proporietors!) On the ground that it' was an appropriation Bill,. Mr Massey stopped the third reading of Mr Veitch’s State Bank Bill. Mr Massey’s Bank Bill ought to have been rejected by the House because it was a misappropriation Bill. In 1895, Mr Seddon said “ at present with the guarantee the colony has given, the debentures for £2.700.000 and tho £SOO,<X)O of preference shares for the time being the bank be'bngs to the State.” And Mr John M’Kenzie said that “he could' get thousands of shares to-morrow for nothing, if ho would undertake the responsibilities attached to them. The whole of the bank belonged to the colorty.” Unsuccessful in its attempt to appropriate the. whole of the reserved profits in 1913. this present Act transfers some £750,000 out of it to the ordinary shareholders capital, at the same time graciously permitting the State to take another £375.000 in State shares. The Act “entitles” all ordinary shareholders to get ten £1 shares in exchange for their shares of £6 13s 4d each. That converts their nominal paid-up capital from £1.500.000 into £2.250,000- —adding the £376,000 from the reserved profits to the £500,000 of A, and £250,000. of B pre» ference shares the State’s capital is now £1.128,000. . The “business principles” .of the bank appear to be to appropriate as much as they can get. It is ordinary shareholders who have, the real preference shares, whereas it was their dividends and capital which ought to have been limited. The Bill was Mr Massey’s Bill,, therefore it. appears that Mr Massey’sJdca of a fair snare is two to one. Not content with the foregoing advantages the bank is empowered to create further capital not exceeding £2,250,000. One third of these shares to be offered to His Majesty the King in £1 shares—as the property of the Dominion, but these shares convey no right to take any part in any meeting of the ordinary shareholders. Mr Massey wants to * “ stablish the position

of the shareholders.” Now a State Bank wants no bank shareholders and none of their capital!. In 1913, tho Commonwealth Government Bank was established, without shareholders capital. It was guaranteed by the Com- .V monwealth Government. Its accumu- ■/. lated profits ’ amount to £2,300,000 which has been placed to reserve fund. “r. No dividends, and all profits for the State: ’> v ; Having stabilised the shareholders as far as he could, Sir Massey suggested a Parliamentary. Committee next session to inquire into the banking ques- '*■ tion I— l am etc. , -i. X MILES * VERB ALL. Swannanoa, 24, 1920. J