BANK OF NEW ZEALAND.

New Zealand Herald, Volume XXVII, Issue 8385, 13 October 1890, Page 6

BANK OF NEW ZEALAND.

MEETINGS OF SHAREHOLDERS. [FROM OOK OWN COKKJBSH'ONDKNT.]

London, September 6. TriE unexpected always happens. Tlio special general mooting of shareholders on August 126, for the election of directors on the London board, and the ordinary general meeting on August 28 at which the policy of the now board was revealed, both passed oil' quite quietly and without excitement. On the morning of tho firwt meeting one of the financial critics of tho Bank did its utmost to arouse ill-feeling by once more reiterating Mr. Buckley's charges respecting two members of the New Zealand Government who were said to be heavily indebted to the Bank. But these tactics were neutralised by the anticipatory explanations offered by the authorities and by the revelations which recent mails had brought from the colony. The meeting was, therefore, characterised by a degree of harmony which must have proved .sorely disappointing to the enemies of the Bank. The chair was occupied by the Right Hon. Sir J. Fergusson, a member of the old London advisory board. The tact with which he conducted boththieund the subsequent meeting was the subject of comment and approval. Tlio only note of discord that was apparent during the brief proceedings of the special meeting was sounded by Colonel Wiloclc, who exhibited a disposition to animadvert upon the past policy of the directors, but was promptly stopped by the chairman, who, however, promised him tho fullest opportunity of criticising the policy of (he Bank, at the meeting to be held on the 2Sth. Colonel W'ilock proposed to move a resolution in the following terms : —"That, as it appears that the affairs of the Rink have been most culpably mismanaged both by the directors in New Zealand and the late management in London, and it is evident that other colonial banks have steady and honest boards of directors, steps be taken to ascertain which of the Australian banks would be inclined to make the best otier for tlie , ire large and profitable business of the Bank, and that such ofibre bo laid befoie a general meeting of the shareholders/' The Chairman said that as that meeting had been called for the definite purpose of electing directors, he could not tako that resolution. It might, however, be proposed on the occasion of sunn; future meeting. With this single exception everything passed oft inujt peacefully. The meeting on the 'JSth August was largely attended, and was hell at the Can-non-street Hotel. Sir .lames Fergussou again presided. He spoke tit considerable length, and in a tone which evidently commended itself to the shareholders, who frequently and warmly cheered him. The report was adopted unanimously ; resolutions necessary to give effect to the policy thus approved of were carried item, con., an i the meeting came to an end with a celerity which surprised everyone. The extraordinary unanimity that prevailed indicated the revival of confidence in the minds of the shareholders. Even Colonel Wilock made no attempt to submit the condemnatory resolution which he had threatened to bring forward at the previous meeting.

The comments upon the drastic procedure adopted have not been important. Tho Times has created some surprise by publishing the following in its money article some days alter the meeting : —

Sufficient attention has hardly, we think, been called to sonic of the remarks of the chairman at tiie meeting of shareholders of the Bank of New Zealand, which took place on the "Ju'th tilt., in view of the dangerous position into which this institution was allowed to drift before the changes now made were determined on. Tins is just one of those cases which justify attention being prominently directed to the liabilities which directors incur when they take office. On the occasion referred to Sir James I'Vrgusson rein.irked, in the course of his observations, " But, gentlemen, I have to say for the London Advisory Board that we had no knowledge of the details and administration of the head office. Our duties were chiefly confined to the ordinary banking business in London." It is singular that the directors in London had no knowledge of what was going on in New Zealand when it was well known, long before the difficulties of the Bank were notorious, that others had severely suffered by losses due to the speculation ill land in New Zealand, in which the li.iuk was so deeply involved. There is very little doubt that, had the advisory Board in London demanded to be informed of the Bank's true position in New Zealand when unfavourable rumours were circulated years ago by those who knew what was going on, the losses could never have reached the dimensions they ultimately attained. The enormous increase in the number of public companies of late years brings with it such an ever-increasing demand upon the time and abilities and watchfulness of directors, that we think, sooner or later, more thoroughly independent audits will be necessary. To this end it in iy be necessary for the Board of Trade to appoint paid professional auditors, whose sole business it, will be to keep boards of directors Up to the proper discharge of their duties.

The following reports of the Bank meeting are taken from the London Financier :—

SPECIAL GENERAL MEETING. There was a largely-attended meeting of the shareholders of the Dank of New Zealand at. the Cannon-etreec hotel on August -i. The meeting was a special general one, and was culled for the purpose of electing seven directors in the room and .stead of the New Zealand directors who have resigned in order that a London Board may be elected. The chair was occupied by the iliglit lion. Sir ■James Fergusson, M.1 , ., a member of the old London advisory Board, The acting-secre-tary (Mr. (J. (i. J.'egettneier) having read the notice convening the meeting, and the minutes of the meeting of shareholder* held at New Zealand on the 24th March, lri'.h), which were confirmed.

The Chairman: said : Gentlemen, allow me to say at the commencement that I am sorry that this meeting should have been held at this period erf the year, when it is so inconvenient for in my of the shareholders to atte .1, but, as you will have noticed from the minutes read, it is necessary that the meeting should bo held not later than August, and the preliminary negotiations and proceedings which we had to go through before we were in a position to meet the shareholders, prevented its taking place at an earlier period. The meeting then is called in pursuance of an Act of the General Assembly of New Zealand for the .purpose of electing a board of directors to carry on the business of the Bank at the head ofliee, which will for the future be located in London, and it has naturally been almost the very first duty and consideration to find suitable candidates to place before the shareholders as directors, in order that the new board may be constituted in a manner to command the confidence of the public. There are seven names put forward according to Act of Parliament, and of these, three arc members of the old advisory board. They are the Right Hon. A. J. Mundella, M.1 , ., Mr. J. A. Mweii, and myself. 1 hope! may be permitted tosay in •ny own justification, that it has been because we have been led to believe, by those best qualified to form an opinion, that our continuing to be directors of the Bank in London would be for the best interests of the Bank, that we have consented to have our names put forward. It is a post of honour, I hope, and certainly of heavy responsibility, and it is not one to be greatly coveted, but, nevertheless, with the colleagues whose names art; about to be proposed, I do believe th-.t we shall be in a position to carry on the business of the Bank with good prospects of commanding the public confidence, and, I trust, the support of the shareholders. As a matter of course, we who have agreed to be nominated for your suffrages have agreed on our course of policy. That policy, in general terms, has been put before you in the circular that we have addressed to you, and which is, of course, in the nature of an election address. It is only on condition that we shall be so far entrusted with your confidence as to be enabled to take efficient and drastic measures necessary to put the Bank on a firm footing, that we have consent d to take ollico. On Thursday, at our meeting to he held then, we shall, if elected, put that policy before you in detail, having in the meantime constituted ourselves a Board. The shareholders will see that at the present meeting it would be impossible to enter upon the general topics relating to our affairs. If we are honoured with your confidence we shall take care to be perfectly frank and explicit with you. In the event of any of those gentlemen who are nominated not being elected, I must remind you that it will be necessary to go through the form of election afresh, and to issue notices for the holding of another election. 1 will give you the names of the gentlemen who are nominated. The first is Colonel Robert Baring : he is a director of the General investment Trust (Limited), the Marine Insurance (Limited), and the Merchants Trust. The second is Mr. John Alexander wen, who has been for the past two years a very efficient director of the London branch of the Bank. The third is Mr. E. Herbert Fison : he is a man occupying a very prominent position, especially m Ipswich j

and was one of the large shareholders who responded to the invitation of the directors sonic few months ago to confer with them on the state of the Bank's affairs with a view to their assuming the responsibility of the head office, and the countenance he gave us on that occasion, and the good sense he displayed, convinced us that he would be a very valuable director. In the interests of the shareholders I think it is desirable that such a gentleman as Mr. Fison should be elected. Then there is Mr. R. 11. Glyn, who is a director of the Bank of British North America. lamjsure that he will prove a very admirable director. In fact, I do not think 1 shall be doing wrong iu saying that we hope he will be the president of the Bank. The next name is that of the Right Hon. A. J. Mundella, who has given an immense amount of pains in carrying on the business of the Bank. He is one of the oldest directors ; in fact, ho was a director long before I had a seat on the board. The last name is that of Mr. T. M. Stewart, the late manager of the London office. No one possesses a more complete knowledge of the affairs of the Bank than he, and, if elected, I am sure that he will give most valuable assistance to his colleagues. I shall propose, in the first place, then, that Colonel Baring be elected a director. Mr. Poktkk asked what were the qualifications of a director? The Chairman replied that the qualification consisted iu the possession of 200 shares. He assured them, however, that all the gentlemen whose names he had mentioned vrere fully qualified. Major (•eorge seconded the election of Colonel Baring, which was unanimously agreed to. Before proceeding with the next name, Mr. Caktkk asked if, W electing the gentlemen whose names were bafore them, they were committing themselves to any particular policy? The Chairman replied that the policy of the new Board would be sec forth at the meeting u> be held on Thursday, and that it would depend upon the adoption by the meeting of the resolution to b« then submitted. Colonel Wii.itcic was Animadverting upon the past policy of the directors, when he was called'to order by the (hi airman*, who observed that full opportunity would be given at the meeting on Thursday for the discussion of the policy shadowed forth in the circular that had been issued to ttic shareholders. The CIIAIKMAV next proposed the election of Mr. J. A. Ewen, Mr. Col.l.ins seconded the motion, which was agreed to. The Chairman proposed that Mr. K. Herbert Fison be elected to the directorate. The Right Hon. A. J. Mitndkma, seconded tlie resolution, which was approved The Might Hon. A. J. Mundklla, M.F., in proposing that Sir James Ferguaaon, M.P., 1)0 elected a director, said he did so because he was so fully cognisant of Sir James Fergusson's services to the bank. He was betraying no secrets when he said that neither Sir James Fergusaou nor himself would have been found in connection with the Board had it not been for tlie greatest pressure which was exercised upon them to remain some years ago. They had stood by the shin since then an a matter of honour, and they wished if they could to steer it safely into port like honourable men. During his twenty years' connection with the Advisory board of the Bank, he had found it to be admirably conducted, anil he had no hesitation in saying that it the colonial branch of the business had beeu conducted as well as had been the London branch there would have been no occasion for them to be seeking their suffrages as was the case that day. Mr. I'uktkr, in seconding the motion, bore most willing testimony to the unwearyiug ability and labour Sir James had manifested during the whole of the time he had been connected with the Bank. The motion was then put and unauimously adopted. The Chairman proposed the election of Mr. K. H. Glyn. Major Grokcie seconded tha motion, which was agreed to. The Chairman proposed the election of the Right Hon. A. J. Mundella, M P, Mr. F. L. H. Collins seconded the resolution, which was approved. TheCllAlKman finally proposed the election of Mr. T. M. Stewart as one of the directors. The Rev. .). B. Smyth seconded the resolution, which was unanimously carried. The minutes of the meeting having been read over and approved, the proceedings closed with a vote of thanks passed to the chairman on the motion of Dr. Dkysdai.e.

ORDINARY GENERAL MEETING. An ordinary general meeting of the shareholders of this company was held on Thursday, the inst., at the Cannon-street Hotel, the Right Hon. Sir ,lames Fcrguseon, Bart., M. P., in the chair. The meeting was largely attended.

Tlie Actisu-.Skcretaky (Mr. C. <5. Tcgetmeiorl bavin.; read the notice convening the meeting, and the minutes of the special general meeting held on the 'itith inst., which were confirmed.

The Chairman said: (Jt'iitlemen, — I have been requested by my colleagues bo take the chair 011 this occasion. That does not indicate that I should occupy that position at the board of directors, neither do I possess the time nor the qualifications for that poet: but bring one of the remaining directors of the old advisory hoard, it seemed proper at this preliminary meeting, and the new epoch in tin: existence of the Bank, that one of the old directors should preside. I am glad to say that the post of chairman in tin , future will be tilled by Mr. Richard 11. (..tlyn, whose acceptance of that otiice, I think, augurs very favourably for our future success. (Applause.) 1 hope you will not be surprised if 1 have to trouble you at some considerable length. 1 shall endeavour not to waste time, but the affairs of this concern are so large that I feel you would not bo pleaded were I not to dwell on the prominent points which must be present at this moment to your minds. Hut before entering on the position and prospects of the Hank, I must be allowed to say a few words of a personal i nut tire. On the present board of directors there are only three members of the old London advisory board — Mr. Minidelta, Mr. Hwen, and myself. We have accepted seats at this new board entirely through the belief which ban been expressed to us, by those best qualified to judge, that it is to the interest of the Bank that we should continue. (Cheers.) You can readily understand that those who have large responsibilities elsewhere would not.stick to an ollice of so much responsibility and trouble, but, gentlemen, 1 lor one feel strongly that if one has in limes of prosperity occupied a post which gave one little trouble, when times change and heavier burdens than we expected are cast upon us, we must not shrink from that increased responsibility. (Applause.) Moreover, gentlemen, so much money has been invested in this Bunk, to some extent in eonsequence of the names and characters of the directors, that... it would he, of course, impossible for me to think of leaving any in the lurch whom I had to any extent influenced. I hope if they have been so influenced that the result will not be unfavourable to them. (Applause.) But, gentlemen, 1 have to say for the London advisory board that we hail no knowledge of the details and administration at the Head Otiice. Our duties were chiefly confined to the ordinary banking business in London. We were, of course, informed generally of the state of the affairs of the Bank, but it was not until about three years ago that we had reason to feel that we were nor, sufliciently cognisant of its affairs, and especially when the dividend was first reduced, and then suspended altogether. We then insisted upon fuller information. The general manager of the Bank w is sent to London to confer with Hi, and I can say that after the report of the committee of Hie shareholders in ISMS, the London board was treated with full confidence by our colleagues in New Zealand. The committee of shareholders in 1888 stated that the affairs of the Bank in no way suffered in our hands, or to use their own words—" Virtually no losses have ever been made in London." Large profits were made in London. For a.number of years the profit there amounted to £40,000 and upwards per annum, and we have nothing to reproach ourselves with on that account. Indeed, I may say that the management in London has left this shareholders no ground for complaint. (Applause.) Lemphasise that, because of a gentleman at the meeting on Tuesday expressing a contrary opinion. .Something also was said on Tuesday with regard to the desirability of having directors on the Board who have no engagements elsewhere. I venture to say that there is hardly a.joint stock company in the kingdom whose directors have not important vocations elsewhere. If you could get first-rate men of business to sit on this Board, without any other calls on their time, it would be immensely advantageous, but that I believe to be an absolute impossibility. What you want is to have men of approved experience and capacity elsewhere, and you must press them to give sufficient time to your affairs, supported by oHicers who give their whole time, and who are thoroughly competent for their duties. We have to give a great deal more time to the business of the Bank than we could have anticipated. Now, 1 would like to come to the date ah which the directors in New Zealand finally resolved that the hi-ad office was to be transferred to London. Withaut going into ancient history, this great question came before US in London, where we, were asked to assume th* responsibility of the Head Ofiicc, and to enable uh to arrive at a decision on that point, it was in the first place necessary that we should be fully informed of the position and the prospects of the Bank in the colony, and we accordingly procured the services of a corn tent gentleman—Mr. David Mean—who visited the colony, and spent three months of the present year in thoroughly investigating all the circumstances of the Bank, its affairs and securities. He took as his starting point the report of the shareholders' committee of the Lfith April, 1888. He caused all the station properties to be revalued by the most trustworthy persons. In the South Island, by Mr. Thomas Bryclone, manager of the New Zealand and Australian Land and Investment Company, and, Me. Xuouus Curtor,

sheep fanner, of Marlborough ; in the North Island, by Mr. J. B. Whyte, M.H.R. for Hamilton, Waikato, and valuer for the Government Lite Insurance Association, who ■was assisted in the \V;iikato by Mr. Reynolds, of Cambridge. The valuations made by these gentlemen have been rigid, and in some cases severe. Forinstanee, the revenue for the year ending 21st March last, from the properties valued by Mr. Brydque, shows a a return of over 9 per cent, on his valuation, and the capital valuation was based upon an estimated revenue return of 0 to 7 per cent. Mr. Carter, again, stated that his figures were those at which he would buy, while, were the properties his own, he would not sell for a much larger sum. On the other hand, while Mr. Whyte is reported to be disposed to be strict and unsanguine, his valuations in the North Island wore in many cases higher than those taken in March, 18S3. Mr. Hoan personally visited and closely examined all the branches and a very large proportion of the properties held in security for advances, and sums up this part of his report in the following sentence : —■" I have no doubt whatever that, with the continuance of the present prosperity in the colony, we shall in a few years see these valuations fully verified bv the prices obtained for the properties.' , '.The sum of the ijloho assets, including that of town and suburban properties held by the Bank, is £3,107.903, They yjelded in the year ending ,'jlst March last a net return of 3"76 percent., or £117, This valuation, as compared with £4,218,204, the aggregate amount of the accounts under this head certified by the committee of 1888 — which was subsequently increased by the Act of Parliament to £4,'250,'2b'!), and from which there was written down £SOO,OUO— shows, as you will have seen from the circular sent to you, that diminished valuation of the tjlobo assets, and further losses, necessitates a provision to the extent of £349,000, while an adjustment of the final accounts leaves a net deficiency of £315,000. The accountants employed by the directors havo recommended that the capital should be further reduced by £300,000 to meet this deficiency, the balance being otherwise provided for ; and this course the directors recommend you to pursue. 1 must say that 1 myself have teltxrcn.tiliflieultyin.iocedii>g to this proposal. The reduced valuations arc to a great extent arbitrary. They are obtained by capitalising the estimated revenue, and tin's has already been considerably exceeded, while the propel ties sold within the year and since the date of the valuations —in the aggregate nearly £100,000 — have realised considerably more than the prices put upon them. .Some of them were regarded as by no means most hopeful subjects. On the other hand, the enhanced valuations of the Bank [premises is more certain, and in some instances has been confirmed by actual oiler's for purchase or lease. The gain on this account might therefore not improperly have pro (auto been set against the loss on the other. But we had, too, to consider that the committee of shareholders did not in ISHS take credit for the gain of £152,000 then estimated, and that, if now accepted in aid of deficiencies, it would involve a large annual writing-off from revenue for depreciation, while in the stricter treatment of our finance which we desire to inaugurate, the value had better bo retained amongst our latent resources, being none the less real and substantial. We trust that the shareholders will support us in the severe treatment which we propose to apply to the case. It will be apparent that the knife has been sternly applied to every weak spot, and that as far as possible for skilled investigation to ascertain, what remains is sound, prosperous and promising. (Cheers.) But before undertaking the responsibility of having the head oHi'ie in London, the directors had also to ascertain whether they could command sufficient capital resources to restore the diminishing business of the Bank and give it a prosperous future, it must bo known to all that the attacks made on the Bank and the losses the Bank has sustained, lias damaged its credit. It is well known there has been a falling off ill the fixed deposits both in this country and the colony—those fixed deposits which constitute so large a portion of our working capital. This has considerably diminished the earning power of the Bunk, but I shall presently show you that in the colony there has been far less damage done to our credit than has been the casein England. In t'ie colony, where it is best known, and where all that can be said against the Bank is at first hand, and not as here repeated through the medium of the journals!, there has been a surprising maintenance of confidence in the Bank, and a .smaller diminution of its working capital. But, nevertheless, we have to keep in hand a large sum in coin and cash balance, in order to meet our liabilities as they accrue, and it was necessary that that should be set free and profitably used. Several schemes came before us, and several offers were made to us, but finally a proposition was made from a very friendly source, from gentlemen friendly to the Bank and the directors, by means i>t which the whole of these unconvertible assets were transferred to a company, and a large sum has been rendered immediately available for the services of the Bank. The proceeds of one and a-lialf millions of debentures have become immediately available, thereby setting free tile large cash balances previously referred to, which will revert to our ordinary business. (Cheers.) As 1 have said, the immediate result is to set free these resources, but the ultimate result is, 1 think, even more important. The whole of the .shares of this assets company remain the property of the Bank, and therefore all the improvement in these properties will ultimately come to the B-ink and will be to the profit of the shareholders. It is not too much to expect from this source ultimately that the sacrifices you are now called upon to make will be recouped. (Cheers.) There is another great benefit, because in tlu meantime there is no occasion to press the sale of landed properties in an overcharged market; but as 1 have stated, the sales in the last year have been considerable and at higher prices, and encouraging for the future. The shareholders must feel a great interest in the working of these properties, upon the improvement of which depends so largely the ultimate recovery of the losses they have sustained. Mr. Heau reports that he considers Mr. Hauua, under whoa; management they are placed, a thoroughly eflieient oliicer. Me bays " he confidently expects that a considerable increase may be looked for." And now a more important matter is Mr. Mean's description of the general business of the Bank. 1 should like to repeat what he says in his own words :—" As to the current business, 1 carefully examined into the liabilities of every branch and agency of the Bank. 1 had special returns prepared, with full particulars of every security held against advances, which 1 afterwards went over with the managers and sub-inspectors in New Zealand. The Australian and Fiji returns 1 went over with the principal inspectors at Auckland, and compared the special returns sent me with the latest inspection reports of the different branches. I am most pleased to report that I found the current business remarkably clean and mainly of a good character, deposits being well maintained, especially at the smaller branches, and this notwithstanding the many rude shocks of late to the Bank's credit. Indeed, it was a matter of surprise to me to find how well the business had held together under circumstances which would nave entirely wrecked a weaker institution. But the fact is the Bank ot New Zealand has a firm hold on the goodwill of the New Zealand people, notwithstanding all its blunders and mismanagement, and 1 am satisfied that once confidence is reestablished as to tin; Bank's financial position a prosperous career is in store for it." (Cheers.) Now, gentlemen, two fo. cures in the positioii of affairs claim our attention, and both are full of encouragement to us. The first is the extent to which public confidence in the soundness and stability of the Bank lias been maintained in the colony where its circumstances are best known, as evidenced by the fidelity of our customers and depositors. The second is— it is a most important feature to my mind—the general revival of prosperity in New Zealand; the increased volume ot trade, the renewed demand for landed property, and the great increase of the staple exports. I have before me most remarkable extracts as to the. fact of the enormous increase in the staple exports of the colony. May I give you two or three? The export of wool alone has shown an increase of 4J per cent, on the year before. In frozen meat there was an increase of 20 per cent. ; in grain of all kinds 15 per cent., &c. And whatever inference may be drawn from the great •preponderance of 1 exports over imports in New Zealand, there is this to be remembered, that the value of exports over imports amounts to the annual charge of the debt of New Zealand. Now, I the sales of Crown lands are most remarki able, showing the enormous number of holdI ings in the hands of the people, the increase showing that there is one landowner for every sixteen souls in New Zealand, There is a very encouraging fact also in the great amount held in the Government Savings Bank, showing the prosperity of the people. During the twelve months ending 31st March, 1890, there is an excess of deposits over withdrawals in each quarter, the increase on the year amounting to £64,000, while the balance in the hands of the Government on the 31st March was £2,760,000, received from over 100,000 depositors. This shows that one person in six of the whole population lias an account with the Savings Bank. The only other fact in this connection, which I would refer to, is that the accounts of the Bank of New Zealand show for the last twelve months little falling off, but the attacks had this —that instead of our getting our share, which we might have expected, of the great increase of business, because of the revival of the prosperity of the country, we have barely been able to hold our own. I hope that by showing confidence in this old iaatitutiou we ehall meet the

attacks which are made upon it, and that it will show in coming years that not only does it hold its own, but that it can get its fair share of the business justly arising from the impr •vement in the prosperity of the colony. (Cheers.) The question must present itself to the shareholders and the public—if the general business of the Bank is of such a character, if there is so large a business in the colony, and if these assets show so great an improvement, why should this reviving prosperity not have been relied upon to work out the restoration of the Bank's position, without recourse to extraordinary and drastic measures? 1 think it well might have been, but we have had foes in our own household. Last December we had so entirely recovered from the effects of the crisis of ISSS that the fixed deposits were actually increasing, and when fresh attacks were made upon us they went down. I shall preaently deal with Mr. Buckley's charges, but in the meantime I hope and believe that good will come out of evil. If we had acquired, as we might have, this increasing yield of the assets, the reviving prosperity of the Bank would have rendered our recovery gradual, but we would not have been able to undertake the extended business of a legitimate character by the employment of the capital now available. \V ith regard to these attacks, while undoubtedly there is a modicum of truth in some of them, we have had to discover it. The properties have been overvalued, but it must be remembered that the losses we are now called upon to acknowledge are not altogether additional depreciation of property, but losses in the way of business which Mr. Buckley, when he was president of the Board at Auckland, did not meet, but has left us to meet. These were again and again brought to the notice of the Board, but they were not met, and they now uoinc to make up this sum of £300,000, which you have to meet. It is not the case that Mr. Buckley's difference with his colleagues was with regard to the fact that there was such. They knew it as well as he did, but they considered they would be worked out by degrees, and the great increase ill the yield of some of the properties and the higher prices, go far to justify them in their views. His wisii would have been to have smashed a good many debtors, and made a dead loss. But in dealing with these matters 1 must refer to the circular issued on the 2Sth May, ISSS, by the shareholders' committee, of which Mr. Buckley was a, member, in which they state that ill making their estimate ot losses, they were guided " by their own personal knowledge of the general condition and prospects of the various parts of the colony in .which the Bank's securities were held, ' apart from the report of valuations submitted to them by the Bank's officers. Four months later a committee confirmed that statement by telegram to London, and subsequently Mr. Buckley, as president, repeated at several half-yearly meetings his confidence in the integrity of the valuations, in October, 1889, he publicly enumerated other various losses which had been ascertained in winding up sundry mercantile concerns which it was considered the Bank could not further carry on with advantage. These disclosures were made not with the view of admitting that he had been wrong in his previous estimates, but in order to accuse the stall of wilful concealment of known losses, and of having intentionally misled the Shareholders' Committee by overvaluing the i/iobo assets. Ami he has bcenjustly criticised for havingdelayed these avowals until he had disposed of his shares. After a careful investigation of the returns at his disposal, Mr. Heau found no justification of these statements. It is, certainly, true that in certain cases too high a value had been placed on securities, but this was, he believed, owing to an imperfect acquaintance with the character of the properties, and not for any desire to place incorrect estimates before the committee. Most of the accounts referred to by Mr. Buckley were at Auckland, and it is on record that the manager there, during the early part of 1888, and also in ISS'.I again and again called attention to the necessity for making provisions for future losses. Mr. Buckley's subsequent behaviour indicates a misgiving as to his ability to justify his action in this respect, for, although his attitude was the assumption of extreme frankness, there is apparent uneasiness in regard to his own position underlying his attacks upon the directors and officials. In one of his numerous circulars, he asserts that Mr. llcans report confirms the statement of loss, but forgets that this was not the point of difference between him and his late colleagues. They were is cognisant as himself ot the losses, for they were the result of action taken when lie was president, but while lie would lead the shareholders to believe that these losses were absolute and irrecoverable, they were convinced that the differences would be made good out of future realisations. Bur. the most important matter in this connection is his Litest circular to the shareholders, in which, referring to a number of accounts, he calls them " white elephants,' and on which he predicts enormous losses. With regard to tiiese he says that Mr. rfe.in has taken no notice whatever of these in his reports. Now every otic of the accounts in question is reported on by Mr. Hean, but as the documents have not been seen by anyone but the Board of Directors in London, shareholders can judge what importance to attach to his know! Ige of their contents. Take the Auckland Flour Mills; the valuation is £'2.*),000; they earned in the last year to 31st March £1437, equal to f>.7 per cent, upon the capital; and the earnings since t\n\e considerably increased. The Auckland fibre Company was valued at £35,957, showing £12,000 ot assets over liabilities. The debt is perfectly good, and the company will undoubtedly pay dividend. Moiriu and Company, Limited, which includes the Onchunga Ironworks, the latter is a most important undertaking lately completed, being the first works for the manufacture of steel in New Zealand. The valuation of this account is £141,000 odd, which Mr. Heau states is fully secured. The earnings last year were £t)504, or (j per cent. The Auckland Tramways are valued at £'27,;>00, after having been written down by £isOOO. They are now earning l> per cent, on this amount, and a Melbourne syndicate are in treaty for their purchase, .lames Williamson, valued at, £75,1)00, secured by mortgage over the Surrey Hills estates, valued at £l00,0;)0, will work out in time. Frozen Meat Company, valued at £37,oOO; security valued by Mr. iteanat £(50,000. New Zealand Native Land Settlements, £140,'2y0, .security more than ample to cover debt. Auckland Agricultural Company, x'i'S.O'K), .shows surplus assets over liabilities of £180,000; Bank holding preference shares. (Cheers.) That will show how reckless and unfounded these statements are. There has been loss even since the report of the committee. We have suffered lobs also in a quarter where we had not looked for it. The Sydney defalcations reflected discredit on the Bank, and while we know we have many zealous officers in New Zealand, who, I hope, will long serve tiie Bank, we must undoubtedly have strong in-iuagrmenc in the colonies. We must have the strongest administration at the head of the business affairs that can be got—(applause)—so that such occurrences as that of Sydney may become impossible, and that we may rely on the reports to us as to the character of the business. 1 think something must be allowed for the losses that have been incurred in times past. Undoubtedly they have been great; there has been overtrading and rash lending; but you who know the colonies so well are also aware that after a few years of great prosperity there was overconndence in the value of land in New Zealand. How many of us purchased land in the full belief that it would show an abundant return, and how many have been disappointed. When the advances were made on the security of landed property, I do not doubt that, according to the valuation of the time, the advances were thought to be amply and fully covered. The Bank is only in the position of many others who were disappointed. The frugality that has been introduced in the Government of New Zealand itself will no doubt be copied by this and other institutions, and I think we may go forward in confidence that that rashness is a matter of the past. Much may be done by the reduction of some of the branches which have been little profitable and the withdrawal from some districts, but what is required, in the first place, is the confidence in the shareholders. They must, and will, I hope, disregard the ridiculous charges which have been thrown broadcast. It was stated the other day, for instance, that the debentures of the Assets Company had not been fully taken up. To my knowledge the large houses that offered received only 50 or 60 per- cent, of their applications. (Cheers ) It has been stated by some that, the Bank was in debt to its bankers, and that £000,000 of the £1,500,000 of debentures would be required to pay that olf. Now, we have never been in debt to our bankers. (Cheers.) It has been stated that the London directors owed money to the Bank. None of us have ever owed one farthing to the Bank —(cheers)— and many charges have been made even against individual:!, to which I think we should do well at present not to refer, although some of the. most prominent I know to be most cruel and unjust. (Cheers.) lam sure there is not a man iu this room who more regards the sacrifice the shareholders have had to make, and are called upon to make, than I do. 1 never thought to be connected with an institution that would have to write down its capital. We do not desert you, but we would ask you to recognise that as we stand before you, not haviug been responsible for the loss, we cost in our lot with you, and call upon you to support us in the severe, though just, i>olicy of recognising our responsibility of meeting our losses, and so looking forward with greater confidence to the future. I now move that the report be received and adopted. (Loud cheers.) Mr. A. J. Mundella, M.P., seconded the adoption of the report. Mr. Snow thought the value of the shares should not be reduced any more than was

absolutely necessary. Mr. Hean was a most capable man to have been chosen for an examination of the property and he was quite willing to accept that gentleman s valuation. He was not at all likely to have over-estimated any of the assets, and it would no , - be fair to reduce the shares any more than was lecessary. He wished, therefore to move as an amendment, ' I. hat the deficiency of £321,216 be at once(written off bv reducing the capital by £175,000, being 20a on the old £7 shares, and 30s on the new iIU shares, and that the £150,000 increased value of Bank premises be used as a sct-oB against the deficiency, to which add *54,0u/ arising from the sale of the yloho assets, tlius leaving a surplus reserve of £58,290. Captain Dibley opposed the amendment, believing that if the shareholders refused to accept the report of Mr. Hean they would lose the support of the public. He hoped therefore, that Mr. Snow would not press his amendment. Dr. Dkysdale said that the shareholders must consider it a great advantage that the Bank had now such an excellent Board of Directors. The directorate in New Zealand had managed the affairs of the Bank in a disgraceful manner, but that was now a thing of the past. The present directors were men connected with banking affairs, and it was better to follow their advice than accept such an amendment as had been proposed, and which he hoped would be withdrawn. Mr. ROSS remarked that he had lived many years in New Zealand, and he was certain that the Bank had a chance of doing a splendid business in that colony. There were five other banks there, but he believed this Bank did as much business as all the other live put together. (Cheers.) He did not think Mr. Snow's amendment was a wise one. Mr. Snow then said he would withdraw his amendment;. (Cheers.) Mr. C. R. Caktkk was glad that the amendin (Jit had been withdrawn. As an old colonist lie had helped to start the Bank, believing it would in a certain way be a sort of Bank of England to New Zealand. There had been a course of scandalous mismanagement in Auckland, and if that was remedied they would doubtless won be in an excellent position once more. (Cheers.) The Chairman then put the resolution to the meeting, when it was carried unanimously. The Ciiairmax next moved, " That £1 15s per share of the existing shares in the capital of the Bunk numbered 1 to 100,000 inclusive, and il'l ids per share of the shares in the same capital numbered 100.001 to 150,000 inclusive be, and the .same amounts respectively are hereby cancelled, such capital having been lost or being unrepresented by available assets, and that henceforth dividends shall be paid on the tirstmentioned shares as representing C'> 5s each instead of £7 each, ana on the secondly-mentioned shares as representing £7 10s each instead of £10 each : but such reduction shall not interfere with or in any way alter the liability of shareholders to contribute a further sum of £10 as provided by tlifi Bank's Acts and deed of settlement in the event of the assets of the corporation being insufficient to meet its engagements." Mr. Mun'della seconded the motion, and congratulated the shareholders on the unanimity which prevailed. They were all fellowsufferers, but they were determined to put the institution upon a thoroughly sound basis. (Cheers.) Mr. W. H. Carter said that about three years ago more capital was raised, the statement being then made that the Bank was on a good foundation, and now the shareholders were asked to meet this loss which had been made before He therefore thought a reduction, if necessary, should be borne by those who had made the loss, viz., the old shareholders.

Tlie Chairman said he had received a letter from a shareholder to the same effect. The additional capital was asked for on grounds which were well '•■ .own to the public, upon a report from a responsible committee, whose valuations were based upon estimates. It was not quite correct to say that this additional loss was entirely owing to the altered estimates, because a considerable amount of loss had been made upon accounts upon subsequent advances. He deeply regretted that the naw shareholders should be called upon to have their capital written down, but he had also some feeling for those who had paid £■29 and £30 for their old shares. Then, aguin, it would be an illegal act to write down one class of shares and not another.

The motion was then put, and carried item. con.

The Chairman next moved—"That the directors be and are hereby empowered at their option to receive from such holders of the shares in the capital of the Bank numbered 1 to 100,000 inclusive as may be willing to pay the same £1 15s per share to reinstate their shares to £7, and to receive from such holders of the shares in the same capital numbered HKI.OOi to laO.ooo inclusive as may be willing to pay the same £2 10s per share to reinstate their shares to £10, and on all .shares so reinstated to pay dividends on the reinstated amouut, provided always that no such payment and reinstatement shall render any shareholder liable to pay any further or larger ainount than he would have been liable for if such payment and reinstatement had not been made.' , Mr. LiLYX seconded the motion, which was agreed to. Tiie Chairman also moved "That the directors are hereby requested and empowered to apply at a convenient opportunity at their discretion to the Parliament of the colony of New Zealand for statutory confirmation of the resolutions passed at this meetiufj." Tiie motion was duly seconded and agreed to. The Chairman* intimated that in terms of the deed of settlement these resolutions would require confirmation at a subsequent meeting. On the motion of Mr. F. L. H. Collins, a hearty vote of thanks was passed to the chairman, and the routdi minutes having been read and approved, the proceedings then terminated.

CIRCULAR FROM LONDON BOARD TO THE SHAREHOLDERS. August 22, IS9O. " In presenting the accounts for the six months ending 31st March, 1S!K), as received from Auckland, the London Hoard desire to lay before the suareholdcrs the proposals which will be submitted to the general meeting to be held on the "28th inst., and to acquaint them with the circumstances which have led up to those proposals. It has for some time past been apparent to those to whom the management of the Bank has been entrusted that two changes of great importance were required in the administration of its affairs. First, to relieve it from the management and realisation of rery large, properties in the colonies originally taken as security for advances, but which—in consequence chiefly of the depression in the value of land, the Bank had been obliged to take over; and .secondly, the transfer to London of the chief control of the Bank. Towers were accordingly obtained by special Act of the New Zealand Legislature, passed in August last, for making over to a separate company the properties above mentioned, and referred to in the Act as the 'globe assets,' and for the transfer of the head office from Auckland to London ; and the necessary resolutions to carry out these powers were duly passed at two meetings of the shareholders held in Auckland in January and February last. For the satisfaction of the London Board, before assuming the administration of the Bank, and in view of the proposed sale of the iilobo assets to a new company, it was thought desirable with the object of ascertaining as far as it was possible to do so their actual value, to send out an expert to the colony to examine and report upon them and upon the affairs of the Bank generally, and Mr. David Hean, t> gentleman of larjje banking experience in the colony, was chosen for that purpose. Shortly after Mr. Henn's return to this country an estates' company was formed with a capital of l-2,000,(KX), the amount being based upon Mr. ilean's valuation of the properties, which is admittedly of a very conservative character, and the estates have been sold to such company, the Bank receiving a portion of the purchase money, representing the proceeds of the debenture issue after providing for expenses of issue, in cash, and having also, as the holders of the entire issued stock of the company, the reversion to the properties after redemption of the debenture issue. It is satisfactory to know that sales to an amount approaching £100,000 of portions of the properties, effected since Mr. liean's report was made, have resulted in prices being obtained aggregating considerably in excess of his valuation. The business of the Bank will now, therefore, be unfettered by the management and realisation of these estates, while any surplus above Mr Heans valuation will ultimately accrue to the Bank, and it may without undue confidence be hoped that the ultimate result will be to show a considerable advance upon the price at which, in the shape of stock of that company they now stand in the books of the Bank. In order to facilitate the transfer of the control to London, the board of directors at Auckland have resigned office, and a new board, consisting of seven qualified shareholders lias now to be constituted in London to take over the chief management of the Bank. Lho meeting for the election of the new Board will be held on the 26th instant, and the following seven gentlemen have given notice in the manner required by the deed of settlement of their intention to offer themselves as candidates :—Colonel Baring, J. A. hwen, biSq., the Right Honourable Sir James tergusson, Bart., M.P.; E. Herbert Fison, Ksq,; R. H. Qlyn, Esq. ; the Right Honourable A. J. Mimdella, M.1 , ., and T. M. Stewart, Esq. There is at present, therefore, no Board by whom a formal report can .be presented, but the following proposals, which I have been prepared with the sanction of the '

constituent men J of the new board, will be adopted by thjn their election as their report to the g*l meeting to be held on the 28th jnstanFhc proposed directors, being coirinced 1 the true policy at the present tine is frite off once and for all every badand Jtful asset of the Bankhave adopted 7 Hean's valuation, and have subnitte<j le accounts to Messrs. Price, V\aterl»'-i and Co, chartered accouiitiiioa—aP'it of whose report is enclosed-and f> the adoption of whose reconimeilatiojthey have insisted as a conditionjf th<p<-king office. It is in contemplatiu to I up the remaining £3 per share in espeyf the 25,000 shares of the new issue held" the colony. The future administration the Bank will be controlled by the Bard ] London, assisted, if it be thought dgira i. by one or more advisory Boards in the >lonies. In conclusion, it may be stte< iat if these proposals are adopted thre istron" grounds for believing that tbj !ik will be put once more upon a soin footing; and that, with management!: d upon a thoroughly prudent bankinj Jicy, the shareholders may look forward renewal of that prosperity which its leuß position in the colony ar.d its splendid aittill unimpaired connection should comiiai-By order of the Londcu Board. *1. Stewart, manager." Aggregate Falaimheet of the Bank of Xev Zealand, atMardb, 1890, including London Office at January!}!, l|

We hereby certify tlir we have examined the accounts of the Bank of ew Zealand for the half, year ended 31st MarchlSDO, and th.it we have counted the cash balan* and examined the hills and other securities helat the Head Office, an,l compared the returns < the Branches with the statements in the foretfojr balance-sheet, and have found the .-same to be corvt. (Signed) R. McDuld SCOTT | Auditors> JoHNBrtv.N j-Auairora. Auckland, April 'Jt?, ISC "44, Gresham-streetE.C, Aiiß. 16, ISO). " To the London Boal of Directors of the Bank oilSe Zealand.

" We have considers the balance-sheet of the Bank of New Zealulfor the 31st March, IS9O, as prepared at Aikland for issue with the fifty-seventh reportof the directors— in connection with the iport of Mr. David Hean on the assets of he Bank, dated 22u>\ July. If the valuatioi of Mr. Hean tire adopted, the balance sheet for the .'il~f March, as ree v e d froirAuckland, requires amendment ■ tin down the ' ylohn' assets by tL . £$,000; thus brinjtin* these assets to a figurtcorresnondinp: with Mr. Hcau's valuation f £3,107,993 for the 30th December, ISS9 : l writing off the loss on current business, £r,OOO : and the amount of the Sydney defalcating, with the costs relatins; to the same, £,'!4,fXXJ; a total of £437,000. Against thi total may be set oil the present balance of profit and loss, £99,783 11s 5d ; and sndry reserves and suspense accounts now sanding on the books, £16,000; leaving a ne deficiency of £o'2l.'_'l(i 8s 7d. There is, in Mr. Hean's opinion, a, surplus value in the Jink's business premises of £150,000 over the amount at which they now stand, the origin! cost of these having been written down n the past, at the <■*• pense of dividend, bvmore than that anion It would be justifuble, in our opinion, under the circumstances, to set off this surplus against the above balam. of deficiency, but having regard ;o the lame sum at which the premises -would then stand, necessitating reduction at the cost of revenue in the future, we should notadvise this course, By the arrangements for Jie sale of the </lobo assets, the amount to ic received by the Bank on thetraLsfer, fno'uding the £l,850,0(J) preference and ordinary shares in the nekEstates Company, will' be £3,162,500. As Mr. Hean's valuation o:' the assets sold is £3,107,993, a surplus of &i,507 arises on the sale, subject to the realisation of the shares at par. We would suirseit that the necessary readjustment of the figures of the balancesheet might be carried nit by reducing the capital account by £300,0)0 (being 11 Ins pep share on the £7 shares, md £"2 Ids on the £10 shares), and writing off the balance of deficiency from the above surplus. This would leive a reserve of £53,290 lls 5d to be carried forward. If it be determined to make up the London accounts in the future to the same date as those in the colonies, two months' interest on deposits and London office expenses will fall on the next half yearly accoiut, in addition to the half-year's own charges. The two months' interest ami expenses, anounting approximately to £19,000, togetler with the rebate on current bills, which his not I—on allowed for in the past, and is estimated at £10,000, might ha properly chafed against this balance. Should our slicescions be adopted, the subscribed capital would then stand at f900,(H», with a reserve lability of £1,500,000, making £2,400,000, wlile the surplus value of the bank premiseswould give an unseen reserve of £150.000.— IVe are, etc. (signed) Thick, Watebhocse,asd Co."

LIABILITIES. Capital paidup :— 100,000 stares d £7 each . . £700,000 0 0 25,000 shires c £10 eaci — £1 paid up . .L£250,000 0 0 25,000 shires oj £10 eaca — £1 paid up . .£175,000 0 0 Notes in circulation 453,205 n l Bills payabh in circttion .. .. 1,707,441 :'. i Deposits and other Mlities .. 8,090,6S3 1 6 Balance of l'rottt an toss .. ... 99,783 11 5 I £11,476,17-2 19 0 BETS. Coin and Cash Balandnt Bankers £1,409,642 13 2 Bullion on hand and transit .. 102,004 12 8 Bills receivable and icuriiies in London .. 1 .. .. 1,437,000 18 0 Bills discounted another debts due to the Hank | .. .. 8,092,757 11 8 Landed property, ba.) premises, etc \ .. .. 373,441 3 C \ £11,476,172 19 0 PiioriT ani>,oss Account. To Balance forward 90,783 11 5 £09,783 11 5 Balance from last half-yr.. -. £00,972 17 4 Frotit for this half-yea without appropriation for bad u\ doubtful debts ., _ .. .. 42,810 14 1 £'J9,7»:; 11 5