BANK OF NEW ZEALAND.

New Zealand Times, Volume LI, Issue 8523, 1 November 1888, Page 1 (Supplement)

BANK OF NEW ZEALAND.

SPECIAL CONFIRMATORY MEETING,

Auckland, October 11,

A special confirmatory meeting of the proprietors of the Bank of New Zealand was held to-day at the banking-house. Queenstreet. There was a large and representative attendance. Mr George Buckley, President of the Board of Directors, occupied the chair.

The Chairman said : “Gentlemen, —It has just been announced that the requisite number of shares are Represented, so that we can proceed to business. Some of you, 1 believe, wish to remark on the Committee's report; a convenient opportunity will occur when I have to move the second resolution. The first is merely formal, confirming one passed at the special meeting. It is as follows :— ‘ That the resolution passed at the special general meeting of proprietors, held on the 3rd day of October last, altering clause 13 ol the deed of settlement, be and the same is hereby confirmed.’ I accordingly move this resolution.”

The motion was seconded by Mr E. Button, and carried. The Chairman : “ The next resolution is of much more importance. It will commit you to writing off no less than £3 per share of your capital. Upon it I would offer some remarks, and first X would say that the Committee consider .their work done, unless the accuracy of their statements is seriously impugned, which I fear is not likely, because their main conclusion that £3 per share of your capital is lost is only too accurate. It may be necessary that I should say more on this point before the meeting terminates. . What I have now to say is to be considered rather in the light of explanations from this chair regarding the motion 1 shall presently put, than as any fresh deliverance from the Committee. It has been suggested that the Committee have under-valued securities in favour of future at the expense of old shareholders, and it has, I believe, been suggested on the other hand that they have not .cat deep enough. Such conflicting snggeationfl neutralise each other. The Com*

mittee did not, in laet, themselves value at all. In the first instance they obtained independent valuations, and they have care fully reviewed these, and they have certified that in their opinion they may be accepted with confidence, with the result already stated. There is accordingly really aio alternative but to write off the lost capital, because otherwise no dividends could be paid for years, and it is, 1 believe, the intention of the Board to declare a dividend at the hall yearly meeting to be held on the 22nd instant.” The Chairman then moved the second resoIntion as follows ;—“ That £3 per share of tbe present paid-up capital of the bank be, and the same is hereby cancelled, such capital having been lost or being unrepresented by available assets, and that henceforth dividends shall be paid on such shares as representing £7 each instead of £lO each, the original amount thereof ; but such reduction shall not interfere with, or ip any Way alter the liability of shareholders to contribute a further sum of £lO as provided by the Banks Act and deed of settlement in tbe event of tbe assets of the corporation being insufficient to meet its engagements.” Mr C, E. Button seconded tbe resolution.

Mr Dingle, of Taranaki, made a lengthy speech, criticising the affairs of the bank. He did not believe in the report!; he bad no confidence in the bank, and he never would have confidence in it again. He asked a question respecting the amount of Property-tax paid by the bank for the last ffoar years. Tpe General Government had, on tbe strength of the printed forms issued to everyone, really been paid Property-tax for all this enormous sum of money. Now, of coarse, there was only three-quarters of a million. He could not understand how any institution could live and prosper while it paid such an enormout tax. They wanted men of brains as managers. The Loan and Mercantile Company had taken the wheat and left the chaff for the Bank of New Zealand.

Mr P. Cherry thought there ware some things that the Committee had not told them that they should have definite information about. They should be informed what were the securities, and what they were worth. They had been kept in the dark too lou? about these things. He moved as ■an amendment, ‘‘That before agreeing to the proposal to write off the £3 per share, equal to 46‘i per cent of the actual cash paid into the bank by the shareholders, it is desirable that farther and more full informatics should be supplied. He considered it monstrous that new shareholders should be a-kec( to come in at par. Mr Cabel Wallis thought there wore points that ought to bo brought before that meeting that bad not been generally noted. In the first place they had been told by a report—and a graver charge could not be brought against honorable men—that the business had been carried on so utterly recklessly that they bad incurred the gravest censure, even if more specific means should not be taken. One thing ihis meeting should know was whether the Committee were satisfied with what the late Diieotora had done with the £160,030. He bad heard that the auditing of the bank had been a mere formal affair. The position of the shareholders was a serious ono. They were called upon to give up a good business to new shareholders. Mr F. G. Ewington thought the Committee was deserving of the thanks of the Shareholders.

Mr J. M. Clark said: I intend to vote against Mr Cherry's amendment, although I sympathise with a good deal that ho said. I shall vote against it, and support the resolution, because I think that ia the airoaaistances it is the beat thing the shareholders can do. The Committee, after an exhaustive Inquiry, have decided that the value of the securities has so shrunk that £300,000 of the capital of the bank must be written off, bo as to make the bank worth 20s in the £, That is, the whole of the reserve fund and £300,000 of the capital. . The Committee having reported that, I belie is the wisest plan for the shareholders to re-liso the position and to write down the capital to the amount at which it will stand in the next balance-sheet when it appears. Further, with regard to the question if it is necessary to write off that £3 in connection with getting new capital, looking at the report I should say certainly it is necessary; and if it is necessary to got new capital in order to strengthen- the position of the bank, to get new capital it is necessary to give capitalists some advantage, that is, to offer then) shares well worth the price which is asked for them. Mr Cherry’s amendment asks us to defer this resolution until further explanation is given as to how much money has been lost in this place and how much in that. To some extent the report gives that information, that is, it states that £400,000 has been lost in this district ; it does not state the exact amount in the Southern districts and in Australia, but I do not suppose the shareholders consider it ia necessary that they should have a complete balance-sheet showing the valuations which the Committee pat against each property. I believe that there would be an amount of publicity which, instead of beirg an advantage to the bank, would be a positive disadvantage, and altogether opposed to bank principles ; and, in fact, an injustice to the customers of the bank, whose account would thereby be placed before them. At the same time there ia pne point on which 1 do sympathise with Mr Cherry’s re. marks, and with the remark whioh another speaker made, and which I infer, from the applause, was approved by a large portion of the meeting,- and that ia the loss, through the Directors, of £160,000. As one critic in a newspaper said : “The Committee la this particular either went too far or not far enough.” Ido not think it would come in as a proper amendment to the resolution now before the meeting, bat 1 do think the Committee ought to go further than they have done; and as regards these particular charges I think they ought to' have specified them. As it is, it rests upon the whole instead of upon those—l will not say guilty paities—but upon those who have received the money ; and further, if they are specified, possibly thesbareholders would be in a better position to decide whether in the circumstances possibly the advance which was made to these Directors might not have been perfectly justified at the time when it was made. Thera is another point upon whioh 1 think the Committee onght to have 1 been more explicit. There are other grave and distinct charges made in the report, and made in a way that they rest upon any one of the Directors or past Directors, and upon the management of the bank. - One of these changes referred to the appointment of the managers in Sydney and Adelaide, in which it says : —“The selection of manager was, in each case, to say the least, unfortunate that is, I take it that the Committee was able to say a great deal more than that. 1 would have thought that it was the most they could have said, but there is an inference there that there is something much worse than ** mere uufortunate choice of managers.” I question, in one instance, even if things were gone into, whether, looking at it for the interest of the bank, the ohoioa was very. “ nnfprtunate.” I refer to the appointment• of the manager in Sydney. I do not wish it to bo supposed that in speaking in this way I approve the appointment of fast men to these positions; bat still, taking into account the whole of the conduct of that manager, if a question had been asked before the defalcations were exposed, who was the beat and most successful manager of the bank,';- undoubtedly the answer would have been* the- manager- in Sydney. Jlr Clark, referring to the charges in the Committee's report, said: —The question is what-- are these charges ? Are these criminal oh arge?, or are they merely charges on which can be brought a civil action? It gives no informatiou. My opinion, and ! believe the shareholders are of the same opinion, is that specific charges ought to bo made—(hear,- hear)—in these matters, or else these inuendoes' ought to be Withdrawn. The Committee ought to go i further and formulate definitely the charges, or to withdraw- them entirely. - Mr Reader -Wood thought that something

more specific should lake place with regard to the report than the mere putting of formal resolutions.' Mr Wodd proceeded ; In para- | graph 12 the Committee’s report says j “ As regards the responsibility, of this state of ! things, the Directors, as your nominees, entrusted with , full power over all the officials and affairs of the bank, are, no doubt, primarily responsible,” and then in a few words farther they name the General Manager in connection with that responsibility. Now what is the meaning of the word “ responsibility ” in that connection ? Does it mean something of does it mean nothing, for when I look at the language of the members of this Committee, and look at their acts, I see the strongest contrast. I see tho Directors blamed in language almost . without measure, and yet at the same time I see a majority of that Committee themselves turned into Directors sitting alongside of the very gentlemen whosb conduct they impugn, and whom thby say are deserving of the greatest Cfensure. How is that to be reconoiled ? Surely men of business will say that if these Directors have been so culpable, so careless, so unbusinesslike, or whatever you like to call it, as the Committee aay they have, men of business would say at once, “ While we thank you for your past services, for the future we decline to have anything to do with your management,” and yet the Committee are taking counsel with those very gentlemen whose counsel they say is so worthless, and worse than worthless—deserving of censure ! How oan these things be reconciled ? No wonder the shareholders ask for further information 1 How are we to censure those whose names we do not know, and how are we to censure the transactions, the nature of which is not told Us ? Surely there is something wanting there, and something very considerable wanting there. You have the fact sent all over the world that these Directors, and tne Directors of the Bank of New Zealand - nobody knows who they are, it applies to the whole of them—have been taking £160,000 of the funds and dividing it amongst them, when I know very well of my own ■knowledge, that there are among the Directors men who have never touched one single sixpence of the bank’s money, and by whom the bank has never lost one single shilling. Mr Wood contended at some length that the Loan and Mercantile Company bad been a gain instead of a deterioration to the bank. The President said that the Committee considered their commission was closed. Nothing set down in the report was passed without mature consideration and full discussion. The report was unanimous, and the men whose names were appended to it were not nobodies or persons without experience of affairs. There were lepresentatives of-all parts of the Colony who took up the bank when it was falling to pieces, and they had already done much to rehabilitate it. They therefore declined to open a controversy with anyone unless the statements in the reports were challenged seriously. On the other hand they considered they had claims to bo hoard by the shareholders when they recommended, in the interests of the bank as a whole, that the matter now rest with the Board of Directors to take such farther action in regard to the past as might seem proper. One part of the report had especially challenged comment, that in which allusion was made to the losses by the Directors. Tney (the Committee) did not say that those Directors took the shareholders' money, or <that the others permitted it to be advanced in any corrupt manner, and they respectfully declined to publish the names. Mr Buckley proceeded :—I wish now, however, to make some remarks of my own. 1 mean they are not to be considered as authorised by the Committee, because we have no chance of consulting properly about them. You have, I suppose, all seen a letter of Dr Campbell’s in the morning paper. I have every respect for Dr Campbell, and I think his fault has been to be too easy aud let things be done which he perhaps did not altogether approve. I think, therefore, this letter should be takeu notice of, though what I have to say is hastily put together. Dr Campbell did not give us much time as a member of the Committee. 1 have given much time to the in vestigation, and have read the minute book and examined the accounts. I noted down some of the minutes which referred to accounts that losses were made by. Dr Campbell pays :—“ Were the securities insufficient at the value of the day ?” Well, here is a minute dated 14th November, 1882. IS was reported to the Board that after consultation with the majority of the Board, the following reply had been sent: “Patetere Company must not be a failure at the last moment; let Kioh make necessary subscription, taking his guarantee irrespective of any guarantee here which I am endeavouring to arrange.” At this meeting were present Messrs Browning, Firth, Stone, Owen, Clark, Williamson, and Campbell. They appear to have made no remark. "Very likely they thought it useless, the telegram to London having been approved bv a majority of the Board. Whether Dr Campbell was of this majority, I do not know. He was present, and made no objection. I need not apologise for naming this Patetere Company, it is a public company, and pretty notorious. What was'the security ? Why the share your money was advance i to pay for. 'How was this company floated in London ?.Simply by your Directors, or,rather the majority, whom the General Manager consulted, advancing your money to alot of dummies. Your money then went into the hands of other people by commissions which were paid, and lots of money was spent. Once into it the bank got drawn into it bit by bit. ; At the very last meeting we had to ad vance J more money to pay a call of some thousands or else lose everything. As it is, a very big loss of your money has come but of that to |go floating. I do not know whether it is what Dr Campbell calls proper business for a bank. I think it was a discreditable piece of business altogether. If I had more time, I might have given you other minutes that would havfl interested you, but it is needless. I say that a lot of yiur money has been lost through laud speculations. If the ridiculously low prices had continued, certain parties would have made money and been reckoned'very smart. Naturally, they did not continue, and your money is lost. I will next notice this sentence about more specific action. Dr Campbell pooh-poohs it, and another Director asks us did we mean criminal proceedings. I will tell you what I mean for my part. We found in the accounts one name, James Williamson, share acoount overdrawn £16,170, one of the loss accounts. Wb of course inquired into it, and we found that two or three years ago it 'was resolved to transfer some . shares belonging to certain persons to the London register. To make up a good parcel, the bank bought some of its own shares, which, we say is illegal, and those, with others, were put on the London . market. That market was what is called fed with them, bub the appetite was not very goed., (Laughter). They went slowly. I remember in London about this time last year, or later, when' there was a good deal* of talk about the bank. It having passed its dividend, reassuring telegrams were published. One of them,' I remember, said With any revival the Directors have no-reason to fear trenching heavily upon the Reserve Fund,” When ! catno there and-found how things really were, I thought that rather queer, but when I found that, about the time this telegram was published, shares of the following persons were sold on the London market, I thought more.* The parties'were the New Zealand Loan and Mercantile Company, Jamesilliamsqa, J. C. Firth, and D, L. Murdock. I do not. know 1 what those who bought those shares now think ■ about-them. I am sure of one thing, they will nob think more specific action out of place. But this is not all. These shares and some .others, includ* ing 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, rgot their shares 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 £l2 per share,

and you now have the shares. This is the transaction tvhioh Dr Campbell speaks about as “ from its Inception in the bank's interest,” I will do Dr Campbell the justice to suppose that he knew very little. I am sure that in this, as in other things, he allowed himself to be used by people more canning than himself. 1 will not take up your time any further with Dr Campbell’s letter; not that I have not any more to say if necessary, but I have said enough at present.

MrD. L. Murdoch : Statements have just been made which I think ate just as far from the truth as the statements on which I have already commented. Mr Holt received a cheque from the Loan Company for transmission to a cu-tomer of the bank in Melbourne and pocketed it as manager of the bank.

The President: He received this cheque as manager of the Loan Company. Mr Murdoch ; He as manager of the bank received for the representatives of the Loan Company a cheque for £IO,OOO for transmission tb Melbourne, and in his capacity as manager of the bank be pocketed the £10,000; and is it fair, is it honorable to turn round now and say that in consequence of the connection between the Loan Company and the bank that I ordered the payment of that £IO,OOO ? . The President: I did not say you “or* dered ” the payment. Mr Murdoch : You did, sir. The President: I said you took the part of the Loan Company as against the bank. Mr Murdoch : You said that I ordered the payment. I utterly deny it. I expressed my opinion in regard to the liability of the bank, bat I defy anyone to say that I ordered ” the payment of the £lo*ooo. The President; Captain Colbeok, who sits by me, says I did not say you gave me an “order” All I said was that Holt took the money out of the hank, and he was enabled to take it out of the bank in consequence of his holding a dual position. I said when the question came to be settled as to the responsibility, you took the part of the Loan Company as against the bank. Mr Murdock : I am juite willing to accept your intention not to have said so, but I will go further and say that I have seen the correspondence which took place between the managers in Melbourne and Sydney as to the transmission of this £IO,OOO, and it was on that that I expressed my opinion as to the liability of the bank. An application was made by the gentleman to whom this £IO,OOO belonged to the Loan Company to accept this money as a deposit, and the manager of the Loan Company in Melbourne referred to the manager of the hank in Melbourne to see whether this £IO,OOO had been received or not. The manager in Melbourne informed the manager in Sydney that this constituent of the Loan Company 1 had exacted the transmission of this £10,000.. The manager of the bank in Sydney wrote back stating that the money had been received, and would be transmitted on a certain date, and then you coolly inform the shareholders that it was in consequence of my connection with the Loan Company that this £ >O,OOO had been lost to the bank. I think it is a most unwarrantable conclusion.

The President : If you will again excuse me, I do not think you are fair to me. What I said was, when the question came to be settled with the Company who should bear the loss, you took the part of the Loan Company against the bank. Mr Murdoch : I think I can appeal to the shareholders that this is not what you said. I gave you credit for having intended to say something else, but you did not say it. As to your farther charge against the managers of the bank respecting the Loan Company advancing the funds of the bank tb take up shares, is that a moat wonderful transaction ? A Company intends to issue shares.- A customer of the bank would be very glad to take up some shares, and he goes to the manager of the bank and asks if he will favour him with an advance to enable him to take up shares. The manager does so, and holds the lieu upon these shares until the advance is paid, and is that a very remarkable transaction, or which is the least deserving of censure ? The President said ha referred to a manager inducing people to take up shares in the Company. Mr Murdoch: I cannot speak of any manager having induced people to take up shares, but I can only say it is a most rea. sonable transaction that if a gentleman, a customer of the bank, wants to take up shares in any company, that he should go to his banker and ask him to supply him with the money, if he has not it by him at the time. The President: My cause'of complaint is that a manager of the bank should act as agent for the sale of these shares aad induce people to buy shares from the Loan Company and offer them money to do so. A Shareholder: Was the money lost ? Mr Murdoch : I think that is a very proper question. The President; The same parties were doing business with the Loan Company. All the shares were held by the bank, but the bank has not at the present moment full possession of those shares, because the Loan Company said they had a lien on them. Mr Murdoch: And a very reasonable thing too, I think. You are mixing up complicated circumstances without accurate information. Exception has been taken to the connection between the Loan Company and the bank ; that is a mere matter of opinion. I may say, when I came to New Zealand in charge of the Bank of New Zealand I found that the • - bank was most lamentably deficient in its squatting connection. I found also that the agents who had pos ession of this squatting connection were most un popular with the squatter, and that the rates of business were as high as 17 to 20 per cent, that these unfortunate squatters were mulcted in. It struck me at once that it was a good opportunity not only to form a connection with a new company, which was bound to be successful,. but that it would also be a valuable ally to the bank, and I drew out a prospectus and forwarded it to L mdon for the consideration of the Board there. It was done, and the Company at once floated into a successful business—a business that was of very material use to the bank, and of very material profit to it. "Very large exchange operations resulted, and the bank got >tbe benefit of them. It may have been that latterly the connection has not been so beneficial, but I can say that the connection generally from the year the Company was started has been of very material benefit to the bank. I do 'not for a moment dispute that individual cases may not be quoted in which that connection may have been a disadvantage. Ido not for amoment dispute that, but I say advisedly that; the general conneotion with the Company has been most advantageous, - I do not' know that; there is any other point in connection with the statement made from the chair that I need now refer to.

The second resolution was then adopted, with one dissentient.

The following resolutions were also agreed to : —(3) That the Directors be empowered to receive from shareholders willing to pay the same £3 per share to reinstate their shares to the original amount of £lO per share, and on all shares so reinstated to pay dividends on the original amount of such shares, provided that such payment to rein* state shares shall not render the shareholder liable to pay any further or larger amount than he would have been liable for if the shares had remained at £lO each as originally created ; (4) That the several assets and accounts held for realisation and outside the category of what may be regarded as ordinary and current business be liquidated by the Directors as speedily as may be, having regard to the advantageous realisation thereof,' and that in thejneaniime such assets be transferred to and held, and treated in globo in aaeparateliquidationaooount, and so as that the surplus in realising any one asset may be set against the deficiency in realisingahy other without'passing such surpluses or deficiencies respectively through the ordinary r profit and' loss account.. 'lt was also agreed that payment for the now shares be made by instalments, and that legislative sanction of the resolutions be applied for by the Directors. ,

The half-yearly general meeting .of the shareholders of the Bank of. New Zealand was held in the Banking House, Queenstreet, at noon to-day. There was a fairly large and representative attendance. Mr Geo, Buckley, President of the Board of Directors, presided. The fifty-fourth report of the Directors was submitted in printed form, and was taken as read. It was as follows: “ The result of the half-year’s operations is as' follows Net profit for the year, which ended 29th September, 1888, £32,607 2s sd, to which has to be added the balance from the half-year which ended 31st March, 1888, £25,861 8s 3d, making a total available of £58,468 10a Bd, which it is proposed to appropriate as follows; - To payment of , a dividend at the rate of 7 per cent per annum, £24,500; balance carried forward, £33,968 10s 6d. Total, £58,468 10a Bd. The dividend will be payable at the Head Office, Auckland, to-morrow (Tuesday), the 23rd inst., and at the branches on. receipt of advice,—For the Board of Directors, George Buckley, President.” Aggregate balance-sheet of the Bank of New Zealand at 29th September, 1888, including London Office at Slat July, 1888 : Liabilities—Dr:Capital, paid-up,£1,000,000; less amount written off to bad and doubtful debt account, £300,000, Total, £703,000. Notes in circulation, £479,510 ; bills payable in cironlation, £1,252,647 la 8d ; deposits and other*liabilities, £10,719,653 18s 3d; balance of profit and loss, £58,468 10s 8d ; total; £13,220,279 10s 7d. Assets— Cr. : Coin and cash balances at bankers, £2,303,213 5s 6d ; money on short call in London, £461,228 17s 9J; bullion on hand and in transit, £353,093 15s lid ; Government securities, £19,377 9a; bills receivable, . and securities in London, £640,593 4s lid ; bills discounted, and other debts due to the bank, £9,069,390 Is 2d; landed property, bank premises, &c., £373,382 16s 4d, Total, £13,220,279 10s 71.

J rotit and Loss Account.—Dr. To dividend on 100,003 shares of £7 each, at the rata of 7 per cent, per annum, £24,500; balance cairied forward, £33,968 10s Bd. Cr. By balance from the half-year which e ded 31 sc March, ISSS, £25,861 8s 3d ; by net profit for the half-year which ended ended 29th September, -888, £32,607 2s sd. Total, £58,468 10s Bd. Reserve Fund.—Dr, To amount transferred to bad and doubtful debt account, £500,000- Cr. By balance from last halfyear, £500.000. The Chairman, in moving the adoption of the report, said ; “ On this occasion we present to you our half-yearly report under exceptional circumstances. The bank has undeigoue 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 twelve months, and I now, without further preface, review those figures by way of elucidation. An allimportant feature iu the bank’s balance sheet is the cash resources it is shown to command. Iu this respect I think you will agree that the position is strong, and therefore satisfactory. Our com iu the colonies, and cash balances with the London bankers, amount to £2,300,000 and 'money at short call in London, £460,000 —in all, £2,760,000, besides £350,000 of bullion in hand or in transit. Such figures speak for themselves. 1 will only add that, as compared with the last half-year, there, is au increase in the cash resources of £500,000. In de. posits there is a decrease of £300,000, whiob by itself is no doubt a considerable sum, but upon a total of some £9,000,000 is insignificant, and in this view of the circumstances in which the bank has been placed, such a result is, I venture to say, gratifying, and even surprising. Bills receivable are less by £BOO,OOO, which is a fluctuation due to the less active half of the year, when there are few or no wool bills current. Ordinary advances are less by £150,000, a matter rather of choice than of. necessity. The larger apparent decrease shown in the balance-sheet is cau-ed by the amount written off. On the whole we have been doing less business and keeping a larger cash reserve, a policy imposed on us by a prudent regard to the existing conditions, but which, as I have already said, necessarily curtails our earning power, otherwise lessened by the lowered value of money, and the less active trade, of which most of us are in one form or another personally cognisant. The net profits for the half-year amount, as you see, to £32,607 2s sd, out of which we propose to declare a dividend at the rate of 7 per cent, per annum, absorbing £24,500, and leaving £BIO7 2s 5d to be adoed to the amount carried forward, which will then stand at £33,968 10a 84. The sum available would have admitted of a higher dividend, but it must be borne in mind that we are yet in the convalescent stage, and do well to go soberly. This outcome of so large an aggregate of business as our balance, sheet shows would be discouraging if our assets were all available for earning a profit, which unfortunately they are not. If they were, we should have much 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 those unproductive assets as speedily as it may be done with advantage, and make the proceeds available to a very material increase of your returns. We believe we shall be assisted iu this by better times and brisker trade, of which there are already palpable signs. You will have observed that settlement on public lands has of late been more active than for ma:.iy years past. There is a noticeably increasing inquiry for prop rty, while sales have taken place at prices something more than encouraging. From any such improve, meot in the general state of the Colony you may hope to profit in a double sense ; more of your resources will be set (free for legitimate employment, and employment for them will be more remunerative. I need hardy add that we shall not neglect to see what can be done to increase the, net profits by judicious retrenchment and concentration. You are aware that it is proposed to increase the capital of the bank, and you have been fully informed of the reasons for this step. We aie glad to be able to say that we have satisfactory assurances that the capital will be readily taken up. Sir Frederick Whitaker seconded the motion for the adoption of the report and balance-sheet. He thought that the 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 oharacter that would have faced the same ordeal and come out of it with the same success. There were one or two questions in the report to which he would tike to draw attention. Briefly, the first was with reference to the profit and loss account. They would find, then, that the net profits daring the half-year amounted to £32,607 2s sd. This sum would have enabled the Directors to declare a much larger dividend than that given, but on the whole he thought they would agree withhimtbat itwasmore prudent to pay a smaller dividend and carry a larger amount forward to the next half-year. The amount carried forward was £33,968 10s Sd. If they would look at the statement of accounts they would find that the coin and cash balances at the bankers, money at short call in London, and bullion on hand and in transit, which meant assets to band, when required, represented a much larger sum, and placed the bank in a stronger position. These facts were worthy of consideration. - Mr Reader Wood thought the report was quite as satisfactory—perhaps more so—than could have been expected by the shareholders after all that had taken place with reference to the bank, but what a commentary was this report on the numerous delightful half-yearly reports which . the shareholders had at various times received assuring them that every had and doubtful

dependency had been fully provided for ; that the reserve fund was intact; and that everything was strictly sound and secure. Yet by this report they lonnd their losses had included the whole of the reserve fund and £300,000 of the capital—so large a mm that he thought that, were they not accustomed unfortunately to deal in millions without knowing the meaning of the term, they would be absolutely astonished at the enormous character of the loss which the bank had sustained. He thought that for many reasons it was unfortunate they should know nothing more of their losses than the large round sum that represents, and that the Directors had declined to give any details of this loss or to tell the shareholders how it bad all come about. He thought that was the more unfortunate, because in the few details that they had had they did not fairly represent the facts. There was ode 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 ha stated - “ There is one account named Jas. Williamson ; overdrawn share-account, £16,170 ;one of the loss accounts.” How he fancied that it must have occurred to almost everybody who had read these words, how could it be that there was a loss account of £i6,170 through the late James Williamson ? For surely if the account was overdrawn to that amount hie estate was liable, and all that the Directors had to do was to come down upon the estate. Yet it bad 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, that the late Mr Williamson’s share account never was overdrawn £16,170; that he never had £16,170 of the bank’s money advanced to him lor any share transaction; and that tbs bank had nut lost a single sixpence by Mr Jas. Williamson ; but, on the other band, the bank had £16,000 of Mr Williamsou’s money, which Mr Williamson found it very difficult, indeed, to get out of the bank. Now was that a lair statement of transactions? He had seen the correspondence, and oouid say that it would support the statement which he a had made. He simply mentioned it because he was sorry to see the good name of a gentleman like Mr James Williamson traduced in the manner in which it bad been—a gentleman who had occupied such positions in the Colony, and also in connection with the 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 bad been given to the report. (Applause.) (Mr E, Rose, who for mauy years bad been the representative of the late Mr J, Williamson, vouched for the accuracy of Mr Wood’s statement,) Mr Law said that perhaps it was well that the 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 be should have more to say with regard to that later on. He was there to defend his character, but be 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. He thought with Mr Wood that they ought to have laid before them a clear, statement of the losses. It ought to be laid upon the table by the Directors, and he asked that it should be done. It was absolutely necessary under the deed of settlement that this statement should be laid upon the table. Mr Law read clause 118, which is to the effect that in the event of the losses being equal to one-half of the capital it should be incumbent upon the Directors to report the full losses to a general meeting of the shareholders. They had no such statement of the losses, and this loss of £BOO,OOO with which liis name was linked together in that disgraceful report—for he; did not hesitate to call the report disgraceful—those losses were not disclosed, and that clause made it incumbent upon the Directors that it should be done. Some argument ensued between the President and Mr Justice Gillies and Mr Law as to the ending of the clause. . <

The President said the Directors had met Mr Law on Saturday with reference to the affairs of the Adelaide bank, and questioned him with reference to two items in the Adelaide returns, but bis explanation had been far from satisfactory and only confirmed the Committee in their opinion.

Mr Law said the Chairman had not answered his request with regard to the statement of the losses. He might state that be was perfectly prepared to go into hiaconduot in Adelaide in the fullest possible manner in order to explain anything, and if he could not get justice in any other way he would have it out with them in a Court of law. Sir Frederick Whitaker said he would like to draw attention to the fact that this was not the business before the meeting. They were not there to inquire into the losses in Adelaide, or whether Mr Law’s management, bad been good, bad or indifferent. But looking at the erroneous way in which Mr Law had read the II Bth clause in jthe Articles of Association he did not wonder at his making a good many mistakes elsewhere. The speaker mentioned the circumstances uuder which the Committee was appointed, and said that it had been shown that one half the capital had not been lost, if they would look at the report they would see that the bank premises and lauded property wore set down at £373,000, so that it was a question, in point of fact, whether the 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 bad 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 once, and if every man was to be allowed to speak as often as he pleased, be would like to know when any such meeting would come to an end. He would have called attention to this matter before, but as he knew Mr Law had a grievance, he was unwilling to interrupt him.

Mr Law said he quite agreed with the remarksof Sir Frederick Whitaker, and thanked him for the considerate way in which he was pleased to make his remarks. He (Mr Law) bad no wish to traverse matters outside of the proper domain, and he had no object except in a kindly and friendly spirit to express his views as to whether he thought the matter had been fairly and justly dealt with. He had come a long way, and he. thought, ho had a right to be heard. He moved, “That the report be not adopted until a full and complete list of the losses of the bank had been laid before the shareholders in accordance with clause 118 of the Deed of Settlement.'’ They heard a gentleman whom he (Mr Law) did not know till then that he represented the late Mr J. Williamson, who for years occupied a distinguished place in the councils of the Bank. Although Mr Williamson was not there to speak for himself, what he had done should not be forgotten, His representative, now present, who was a younger man, challenged the statements, that had been made, and all he (Mr Law) desired was to go into facts in the light of truth. Mr Cherry seconded the amendment. He believed that the shareholders had a perfect right to know where their losses were sustalced and by whom the money was lost. It had been stated that their losses did not exceed half a million of capita!, 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 figures was close on to a million, and if his figures were disputed he would prove each item from the books. ,He asked whether the position of auditor was a purely honorary position, or whether the auditors were paid.

The President; The auditors are paid £SO per annum. Mr Cherry added that in that case £SO was (resented to two gentlemen for auditing the acoonnts. If they had audited the accounts they surely must have known that the balances shown and placed before the shareholders for years were not correct. That question was raised some years ago at a bank meeting, when he (Mr Cherry) asked what were the qualifications of an auditor. Ha received the answer that it was necessary to hold 200 shares. The position of the shareholders was this—that they knew a number of fellow-shareholders by sight, but they did not know which of them had 200 shares.

Mr E. Besketh said ha did not intend to advocate the laying before ,the meeting of any statement of the losses, but he would venture to suggest what in his opinion was the meaning of clause US of the deed of settlement. It appeared to him that the object of the clause was' that no matter whether there was a reserve fund or not, if there was a loss equal in atnouut to £500,000, a statement of the particulars of it should be laid before the meeting of shareholders. (Hear, hear). Even if there was a reserve fund quite sufficient to pay the whole of these losses, they were entitled te take this clause to mean that if so large a loss had been made a statement of the same should be laid before the shareholders. The President said that with respect to the question raised as to the meaning of the 118th clause in the deed of settlement, he thought that the shareholders could answer for themselves, and that the meeting could see that it was merely a master 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 ; were learned in law difiered as to tho meaning of the clause, he did not think it was for the meeting to, decide upon. He might say, however, that he had carefully read the clause, and that he did not think it convoyed the meaning suggested by MrHesketb. It the latter was correct they would have to do everything over again do novo, Ha un derstood that the losses were what remained after deducting the reserve fund and profits. If they did not deduct the profits how could they come to this loss ? and the reserve fund was merely reserve profits which had 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 sttch a question. It was a question for the solicitors of the bank, and they were not present. He was sure in bis own mind that the clause was never intended to operate in the manner indicated. He granted that if their loss bad 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 bis seat. The President said that with reference to the previous balance-sheets, whether they were right or wrong, that was no business of the Directors. The balance-sheets were certified to by persona who were responsible for them. ,

The amendment moved by Mr Law was then put to the meeting, and negatived by about 30 to 8. The President said that 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 bad given in their report all the details that could be given, and had explained how the losses came about as particularly as they could. Were they expected to go through every item, A B and C, and so on through the whole alphabet? A Voice: No; but you can publish the names.

The President added that as for publishing the names they could 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 book.

Mr Wood held that the loss was through the bank’s blunder, and not through Mr Williamson.

The President said he had explained that they wore to be sold pro rata. Mr Wood then said : Why did Mr Williamson not receive his pro rata quota ? The President: He would have received it. Mr Wood ; It was 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 afterward paid out of the bank to Mr Williamson. It proved on inquiry that the money was paid by the General Manager, and he said he paid it by the authority of the Board. The minutes had, however, been searched, but no record of the 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 bis first slice out of the shares instead of pro rata. 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 sales on hia shares, be 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. 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 report and balance-sheet was then put and carried with only one dissentient voice. Mr Law,asked whether they did not think, now that the half-yearly report had been adopted, that they should have the statement of the losses before the meeting. He did not wish to interrupt the meeting, but ha was very anxious that the Board of Directors should 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 hia rating.

Mr Law claimed that he was perfectly in order. His amendment was that the state* ment should be submitted before the report was passed. Now that the report was read he was in order in asking that a statement of the 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 meeting should be taken up in this way. Mr Law continued speaking while he was being called to order, but was stopped by cries of “ Chair.” Mr A. Boardman moved that the whole of the danse 95 be omitted, and the following substituted therefor:—“The auditors need not be members of the Company. No person shall be eligible as an auditor who is at the time of such election interested otherwise than as a member in any traneaction 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 donbl that an efficient audit was a delicate queation, more especially when the bank had branches all over the world. He would read to them what he had to say on the subject. The President then read as follows with reference to this snbj’eot:—“ The object of Mr Boardman’s proposed alteration is to give the shareholders greater scope in the selection of auditors. In . the hope of securing a more elaborate andit. The need for this depends upon what the functions of 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 £6O a year. Nor is it in the matter of

audit that trouble has been in this bank. Losses by fraud or dishonesty have been very exceptional, and on the who’e trivial, and such as they have been the auditors would not have discovered them. The gentlemen who have acted as auditors appear to have adequately discharged the duties prescribed to them under the 98th clause in the deed of settlement. There is no question of incorrectness in the books or balance-sheets of the bank. The balance-sheets certified to by these gentlemen wore correct as aet forth from the books and returns by which auditors (even professional accountants) must go in verifying balance-sheets, because, even if it were contemplated that they visited the ' branches, which it evidently is not, they could not possibly visit them all simultaneously, so as to certify to the correctness of the assets at one given date. If the idea is that auditors would value seonrities and detect bad debts, a very little consideration would 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 become permanent officials of the bank, devoting their entire time to the work. It is the duty of the Directors to provide for the . supervision of this sort. They may fail in their duty, but so might auditors appointed directly by tho shareholders. The Directors are in fact, and must necessarily be, the representatives of the shareholders in this matter. It is the business of the shareholders to appoint efficient Directors. If they fail to do so they will not mend matters by appointing auditors to do the work of the Directors The practice of a large bank with numerous branches is, as it necessarily mast be, to entrust this part of their business to the Directors. In America the Government exercises certain supervision ; but there the system of banking is different, and lends itself to the Government audit, though there are plenty of instances to show that, as compared with the English system. Government interfe ence in America does not secure shareholders against heavy losses. While wo doubt if the alteration proposed would he attended with much advantage, we think that the qualification for auditor is too high. We had in view several alterations in tho deed of settlement, which we think desirable, hut have not thought this a suitable jnnoture to discuss them., If Mr Boardman is disposed to withdraw his motion for tho present we undertake to go into the subject at the next half-yearly meeting, and to bring it up then with the other alterations which I have alluded to for the consideration of the shareholders, I wifi only add that, of coarse, if these alterations are carried they cannot come info force till next year. Mr Boardman withdrew the motion.

Mr D. L. Murdoch said that at the previous meeting certain remarks fell from the Chairman, and at the time ha had only a hazy recollection of the matter which was referred to, therefore he took this as the earliest opportunity to reply to the remarks in question. He would take the oppoitnnity and refer to a telegram of a reassuring character sent to London about this time last year after thebank’a half-yearly meeting, lie was not the author of the telegram, but ha recognised it, and would assume his share of the responsibility. It wks 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 detrimental to 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, but upon a reasonable estimate of the position at that time, and the message especially pointed to the condition in case of a revival. Now ho thought they would admit that not only had the revival not taken place, but that the depression which had existed a a year ago was, np to the last week or two, much more pronounced ; but the statement tnadeby the President to this meeting waathat this statement in the telegram was a deliberate falsehood, and no one knew better than the Directors and the 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.

The President, replying to Mr Murdoch, said that he obtained a copy of the cable message referred to, and he held it in his hand now. He had made that cable message a great deal more favourable than it really was at the time. He was speaking from memory, but since then he had obtainedtha 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 the reserve fund." There it was ; there was no mention of revival at all. Now with regard to Mr Murdoch’s further remarks, ho could only say that, with hia knowledge as a shareholder at that time, he 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 and Directors were grossly ignorant of the actual state of affairs of the bank at the time that cable message was sent Home, or the statement was untrue ; therefore ho positively declined to withdraw one word that he had said, as he believed still that it was s false* hood.

Mr Murdoch said that with regard to that matter the Chairman could not say in the future that he was not afforded an opportunity of denying what he had no hesitation in saying was a malicious libel. Mr Murdoch went on to speak of the floating of the Patetero Company.’ 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 the floating of the Company would prove a failure unless certain shares were taken up by colonial proprietors. Rather than let the Company fail, advances were made to enable the proprietors to take up those share®. As to the floating of the Company, the bank in London had nothing to do wth it. It was floated by a “limited circle,” which the Chairman had been intimately associated with for manv years, and very large commissions were paid to members of that limited circle. 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. 1 wish Mr Murdoch to explain fully. There can be no objection. I suppose you are not not under any obligation to the Secretary in the matter.

Mr Murdoch said he thought there would be an objection. The President said he thought he was en. titled to an explanation with regard to the Patetere 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 £IO,OOO by that transaction. Now for the limited circle. They all knew how companies were floated—how some persons were paid at times to take np shares. He believed that the Patetere Company, was first 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 np shares in that Company. Ha referred to the firm of Dalgety and Co. He bad, however, had no connection with that gentleman for many years. That was, however, the only way in which he could be connected by Mr Murdoch in the matter. There was no further discussion, and on the motion of Mr Browning, Mr John Mac Lean was elected Director. On the motion of the * President, Mr J. L. Wilson and Mr E, McDonald Scott were elected auditors for the ensuing term. \ Mr Wilson, in returning thanks, said he agreed with the suggestions which had been made by Mr Boardman, , ' _ Tne proceedings terminated with a vote of thanks to the staff

The following telegram was received on Monday at the Wellington branch of the Bank of New Zealand : —“Auckland, Oo ober 22. —Meeting satisfactory. Profits, £32,000 ; dividend of 7 per cent ; carried forward, £31,000 ; coin cash. balances, £2,700,000. Profit curtailed by holding largo coin balances."