GOVERNMENT BANKING ACCOUNT.

New Zealand Herald, Volume XXIX, Issue 8960, 18 August 1892, Page 5

GOVERNMENT BANKING ACCOUNT.

REPORT OF THE COMMITTEE. t?T TELEGRAPH: SPECIAL COBRISPpybENT.] Wellington, Wednesday. f The report of the Public Accounts Committee on the application of the Colonial Bank for a share of the Government Banking Account Via submitted to' the House to-day by the chairman of the committee, Mr. Guinness. The following is the resport the committee's report. " The Public Accounts Committee have carefully considered the petitioii of the Colonial Bank of Now Zealand, and having taken evidence at length thereon, have the honour to report as follows :-(!) That tllß Colonial Bank of New Zealand rendered fin important service to the colony iii February, ' ISSB. (2) ' With regard to the statement of the Colonial Bank of New Zealahd that in consideration' of such service a promise whs made that it would receive a share of the Government account at an early date, and also that it would got a share of the Government remittance, the evidence produced before the committee leaves the matter in doubt, but the fact that for some time after the date referred to the Colonial Bank was conceded a share of the Government remittances strohgly sup ports its claim to _ that extent; (3) your committee are of Opinion that in recognition of the scrvice referred to arrangements should be - made to give tp the Colonial Bank of New Zealand a share of the remittances ; (4) a copy of the evidence taken by your committee is attached hereto." The report and evidence Were ordered to be laid on the table.

DISCUSSION IN THE HOUSE. Mr. Pinkerton moved that the report and evidence be' printed. He believed'that the colony owed a debt of gratitude to the Colonial Bank, and as a matter of justice and right to the country and the House the report, and evidence should be printed. Colonel Frasf.r seconded the motion. The Premier submitted that the evidence should not" Be' printed. It was on the table to be inspected by ever}* member of the House, and that ought to be sufficient. Some of the evidence' must be of a confidential nature ; his own opinion, therefore, was that large portions of the evidence should not be printed. The committee, in his opinion, had arrived at the very best decision they could have arrived at after considering the evidence. Mr Fish entirely and absolutely disagreed with the recommendation of the committee. He believed it was most unjust to the Bank of New Zealand. He would like to know something of the voting taken on this question. Mr. Tanner : There was none, so you have the information at once.

Mr. Fish : I prefer to take it from other sources than the lion, gentleman. I prefer to have it from a' sounder source.

The Premier pointed out that the committee hud not suggested that the account be divided, they had simply made a recommendation that the Colonial Bank should receive that which they had received before up to two years ago—that is, a share of the remittance. The report referred the matter to the Government for consideration. Of course, any member might bring the matter forward on the question of supply. Sir George Grey confessed .that it was with considerable amazement he heard the Premier state that as a rule enquiries into the accounts of the colony, that is, the public account, should be in a great part confidential. He could not believe that such a rule as that ought to be laid down. He thought that the House had a right to the fullest and most complete information with regard to every point connected with the public accounts of the colony, and he did not think, the reason given for refusing to allow the evidence to be printed was a valid one. J - Mr. ScOßnr Mackenzie asked how the ! Premier proposed to secure Secrecy if the evidence was laid on the table. It might just as well be published. Mr. Ballanck remarked that there was a great distinction between allowing the evidence ta lie on the table and in printing it as a Parliamentary paper. Dr. Nkwmax assured members that there was nothing in the evidence that was not already known to everybody. Ha thought it; ought to be printed. Mr. G. Hutchison thought it would be very unfortunate if it went forth that there was anything confidential in the evidence. There was, however, a consensus of opinion an the committee that the evidence should not be printed and bound up in the journals of the House, for there had been an unfortunate conflict of testimony between a member of the Legislative Council and an ex Colonial Treasurer. It was not only unfortunate that there should be that conflict of testimony, but one of the parties was no longer here to give his version of what had occurred. He thought also that it would be highly undesirable to record the suggestion that two years ago it was virtually necessary for the colony to have £400,000. For those reasons he did not think the evidence should be bound up in the archives of the colony. After further discussion Mr. C. H. Mills, who said he would like to have an opportunity of reading the evidence so that he might form a conclusion as to whether it should be printed,"moved the adjournment of the debute.

The amendment, which was seconded by Mr. McLean, was carried by forty-four votes to twenty-three. Mr. Fisher remarked that the result of the voting would be to kill the whole concern. Mr. C. IT. Mills replied that nothing had been further from his thoughts than to burke any inquiry. Mr. Fishkk said that the motion would never come up again. " The whole subjcct was stifled and absolutely choked for the time, but those who thought that the subject was for ever stifled were mistaken.

Mr. G. Hutchison : The papers will not, I think, be printed by the House, but thfe Colonial Bank will probably print the papers, and they are quite welcome to them." It was decided that the resumed debate as to the printing of the evidence should be made an order of the day for Friday. THE EVIDENCE. Of the evidence attached to the report the chief is that of the Hon. G. McLean and Mr. W. T. Holmes. Mr. McLean stated that when he was coming through Wellington in the last days of 1887 he was sent for by Sir Harry Atkinson who said he was in urgent need of funds to pay the next interest falling due. In reply to Sir Harry's' application for assistance, witness stated that he would submit tlra matter to the directors of the Colonial Bank. Witness promised that the interest would be as low as possible, and then asked, "Whit about the account? If we succeed in getting this, does that carry with it getting a share of the Government business?" He said it would, that " he was quite agreeable to do that." Witness represented the facts to the general manager of the Colonial Bank. With th© leave of the directors they went to work in England, and procured advances to the extent of £400,000, securities for part of which (£100,000) they meant to keep in the colony. After a while Sir Harry Atkinson said that he must have another £100.000, so that the Bank raised altogether £400,000 from friends, and took treasury bills here for £100,000. Mr; McLean gave further evidence, describing the transaction as one of great benefit for the colony. During the last session of the Parliament in which the Atkinson Government was in power, witness urged that the agreement made as to the division of the account should be carried out. &ir Harry Atkinson pledged himself-to give notice to the Bank of New Zealand, after the session was over, of thfe (fefmlridfloh of'the agreement, ed that the question of the division of the account could then be considered. He did not, however, give the notice, but left it for his successor to do so. Mr. Ballance said he had the authority of the Bank of New Zealand to give the Colonial Bank one-third of the remittances, and, later on, a third of the deposits,, assuring witness that this would" not" make the slightest difference regarding their claiih for a' division ol the account. " In cross-examination Mr. Holmes asked : " Do you remember stating to me that if the Cofonial Bank and the Bank of New Zealand should agree to divide the account they could command, A sufficient number of votes in the House to prevent any other bank coming in!" Witness replied: "I did not' say that.' I said that the Bank of Ney £$alanpl being a partly local, and the

Colonial Bank a purely local institution, taking for granted they nad the machinery to carry on" the" banking "business of the colony, the people would be perfectly satisfied to have the business of the Government done by both of them." " " r i " "" Mr. WilliaM Holmes;, general manager of the Bank of New Zealand, read a \trrtten statement. ' He submitted that the circumstances set out in the petition, if they were as stated, furnished no ground for • complying with the request of the Colonial Bank. The Bank of New Zealand was in nd decree responsible for the diffi cutties attending the Government finance at the time. It wis then, as now, tinder obligation to furnish the Government with &dvaribd£ if required, and had loyally fillfilled that obligation, and more; for, instead of £400,000, it had advanced to the Government £600,000 which were still owing to the Bank when the loan from the Colonial Bank was raised, Later, whfen it was inconvenient to the Government to pay these advances at due date it hadrehewed them, and'they remained butstanding until the Government Were able to place themselves in funds by floating a loan. Notwithstanding any failure of the Colonial Treasurer in ' other directions in which he had applied 'tor assistance, there was another channel than the Colonial Bank through which the required advances might have been procured at 5 per cent., so that the statement, even if tile Colonial Bank had asked 7 per cent, the Government would have befed obliged to pay it, fell to the ground. If the condition upon which assistance was given by the Colonial Bank was that that bank should have a share of the Government account, it was singula? that nowhere in any writing could there be found a reference to such a condition. Mr. John Murray, who was in charge of the affairs of the Bank of New Zealand at the time, had never heard of Such a condition! and was certainly nO party to it. In April, 1891, withess had an iriterview with the Hon. George McLean, when the" latter said that if the Bank of New Zealaud agreed to give the Colonial Bank half of the account, the two banks would be able to command such a number of votes in the House as would prevent other banks from obtaining a share, ana that if the Bank of New Zealand would not so divide he would arrange for a motion in the House for a division of the account amongst all the banks in the colony. Id corroboration of this statement, Mr. Holmed put in an extract from a letter he wrote to the chairman of the Bank of New Zealand ill London at the time. He (Mr. Holmes) afterwards had an interview \frith Sir Henry Atkinson, who stated he had not thought of giving any share in the Government banking account to the Colonial Bank, but was disposed to allow it such a share of Government remittances as would from time to time be convenient to the Bank of New Zealand, Later on he I made a similar statement to Mr. Parfitt, 1 manager of the Bank of "New Zealand in i Wellington. The participation of the Colonial Bank in the Government remittances was conditional on the concurrence of the Bank of New Zealand in every case. It was the practice to refer to the Bank of New Zoaland every offer by the Colonial Bank to sell London drafts to the Colonial Treasurer, and if the Bank of New Zealand objected no transaction followed. Mr. Murray had distinctly denied there was any agreement that remittances Should bo made through the Colonial Bank. The experience of the past and the fact that the Bank had never failed to do' what it had been under engagement to do was the best answer to the contention of Mr. McLean that the account was too large for one bank to conduct, and as for his second reason, that the Government balances were too large to be safely entrusted to the custody of one bank, this was fully answered by pointing to the large sum, £3,300,000, which stood between the creditors of the Bank of New Zealand and any loss. The Bank of New Zealand was as much a colonial institution as the Colonial Bank. Its investments in the colony amounted close on five and a-half millions, or about equal to the aggregate advances of any three of the other banks. Nearly one-half of its profits was divided in the colony, and it was of all banks the heaviest taxpayer. Its total assets approached £10,000,000. It offered to the public a security of £3,300,000 in excess of what it owed, and its investmerits in the colony, While about as large as those of any other three banks doing business in the colony, were £3,477,289 in excess of those of the Colonial Bank. Of the paid-up capital of the Bank of New Zealand, £000,000, there were held in the colony £4?5,300, while the total paid-up capital of the Colonial Bank was only £400,000. The Bank of New Zealand advances in the colony amount, according to the last, returns, to £5,44'2,000, as against £8,540,000 advanced by all the other banks, or about equal to the aggregate advances of any three of the other banks, and £1,631,000 in excess of the advances of the other two New Zealand banks, the Colonial and the National. The Bank of New Zealand, therefore, contributed as much as any three j of the other banks, in fostering the development of the colony. It was represented at 107 points in the colony, as against 71) j points for all the other banks ; it was a large employer of labour, both direct and through the Instate? Company. The single bank system was admitted to be preferable, and no single bank was so well entitled to the Government account, or bo well able to work it, as the Bank of New Zealand.

Important evidence was given by Sir John Hall, who stated that Sir Harry Atkinson had told him that he had made no promise that the Colonial Bank should have arty share in the Government account, but that there was an understanding that they should have a share of the remittance. Mr. H. Gregg, manager of the National Bank ih Wellington, deposed that in 1888 negotiations were undertaken with his Bank for the loan of money to the Government, but these negotiations were stopped by the Government before letters to the London office reached London.