SOME QUESTIONS

New Zealand Times, Volume XXXVI, Issue 8295, 5 December 1912, Page 2

SOME QUESTIONS

BRITISH GOVERNMENT SECURITIES. Mr Alexander* Mclntosh, in accordance with notice given, asked the chairman the following senes of questions : , , ~ x, • What is the exact nature of the .British Government securities held to the value of £500,000 as part investment of the reserve fund? . . What was the cost of these securities, and what is the market value to-day? If there has .bean any depreciation, has full provision been made for it? When was the purchase made, and at whoso instance ? 1 Did it i have the approval of the London board? In reply, the chairman said he thought it would bo most undesirable that detailed information of this sort should be disclosed; not that there was any difficulty in answering the questions, but that it would be a very, bad precedent to establish. The business of the bank was confined to the board of directors by the deed of settlement, and so long os the shareholders had confidence in the board it would be Inadvisable to make public details of this nature. It did not matter whether the transaction had the approval of the London board or hot; • it was an act of . the Now Zealand board. The two were quite in harmony, hut the London board was simply one appointed by the board here, which consequently was responsible for what was done. This answer was not given out of any discourtesy to Mr Mclntosh, who was asked to accept the chairman’s assurance that on all the securities held by the bank ample provision for such depreciation as had occurred was made at the end of each financial year. This was the course that had always been followed. It was known that fluctuations took place in many kinds of securities. One of the best banks in Australia wrote its consols down to' Bo. As to who bought. the securities that was beside the question. Mr Mclntosh thanked the chairman for this information—such ns it was—but said it did not touch his question, which was on a matter that the shareholders had a right to know _ about. Why should the hoard invest in these suecnlative securities at all, when there was no necessity to do it? There were plenty of other securities in wlr'ch the reserve fund could hayo been invested, without investing in the most sneculntive of all securities. It did not matter how his question was answered. He knew exactly what the position was, bnt everyone onpht to know why this course should haye been adopted. Mr Kennedy said it was a matter for the discretion of the hoard. Mr Mclntosh: I did not say it wasn’t. Mr Kennedy said that when he was

in London in 1907 and saw the position of the money he recommended that the bank should buy in on these securities to some extent. The board her© heartily approved thb plan ana authorised the London board to carry' it out. • He defended that action now, A board that could not exercise a wise discretion in such a matter was not worth its salt. He also said that it had paid them better than merely tak~ ing the current rate in the ordinary market. It was only a small item in any case. Mr T. S. Weston asked if they were to understand that the highly speculative stock referred to was British Consols. ~ . ~ Mr Kennedy said he would not call them highly speculative. There was hardly a hank in Australia that had not got them. Undoubtedly they had taken a downward turn during the last few years, but the bank still got tbe same rate of interest on them, and for all that was known they would go up again. He certainly hoped they would.