TO CORRESPONDENTS

NZ Truth, Issue 539, 16 October 1915, Page 8

TO CORRESPONDENTS

Correct name and address must be appended to communications, not necessarily for publication, but as a guarantee of good faith. Anonymous letters are not noticed. ANSWERS TO CORRESPONDENTS "S.J.M." (Auek]anq>.— Similar statements have been published m these columns. No fresh ground broken. J. A. Fowler (Auckland)— A perusual of the correspondence forwarded shows, or at any rate suggests, to "Truth" that the course being adopted with your son Is m his best interests. •Truth" cannot help you m the matter at present v , OUR SEMI-STATE BANK. Dear "Truth"— "A cat may look at a'! king," but according to the Bank of New Zealand Act of 1913, "Such of the B preference shares as are held by His Majesty shall confer no right to convene, vote at, or otherwise take part m any meeting of the proprietors of the Bank." This extraordinary clause appears to me to be a gratuitous -'-insult %o His Majesty, ■nd a most impudent attempt to deny thf> rights of the public shareholders. . The Government not only holds £750,000 of "A" and "B" preference shares, bur also guarantees £1,000,000 of 4 per cent, stock. Therefore the people of New Zealand are really all shareholders, and, consequently to that extent, at least, proprietors of the Bank of New Zealand. However, by the Bank of New Zealand Act of 1895, m which the dividends of tine Government "A" preference shares aro most unjustly limited to not more than 10 per cent (which gives not niore than' 6 per cent, profit to the State after paying 4 per cent interest on the borrowed capital), ( the Act says that ''otherwise, these ehareH confer the same rights and privileges as ordinary shares." If thiß does not mean that the public have the right to take part In any meeting of the proprietors of the Bank as shareholders, I do nut know what it does mean. Speaking m iho Legislative Council, August 4, 1811, thje Hon. Mr. Wlgram claimed that after paying Interest and dividends on the State guaranteed und share capital, the remainder, "whether ''paid m dividends or carried to reserve, bolongs to the ordinary shareholders." And he said that for several years the profits of the private shareholders m their capital of £6Q0,000 had thus averaged about 48 per peat." In un article on "Public Credit and private Enterprise" the Lyttolton •Times" (about June 23, 1909) said: "The State has subscribed the «ime amount of capital as the private shareholders have, £500,000;- but while the dividend is limited for all time, to 10 per cent., and Uriß year reached only. 8% per cent., the shareholders dividend, »a we have already said, is unlimited, and m the not vory distant future may rise to SO per cent,, or even to 100 per cent. This year the dividend was fixed At 12 Mi per cent., an increase of only 2% per cent.' upon that of last year, bat the Individual profits amounted to £260,988, and wero mifllcient to pay a further dividend of 52 per eont. But 62 per oen^t and 12% per cent, make 04 ft per cent. "m the past"! According to this method of division, or appropriation, or misappropriation, this lost year, the private ■haroholderfl make a profit of £080,022, which If over 08 p<;r cent on their capital of lesu than & 1,000,000, while the Btr.te gets a net profit of less than £ tO.OOO on Uh Slate guaranteed and borrowed capital of over £1,250,000! At the. la« meetlngi June 18, at Wellington, of "She proprietors of the Bank." Mr. Martin Kennedy said that "at one tlm* he was strongly opposed to the Government being permitted to take up »ny shares m the Baak"! Considering (i»h admitted by Me*ark. Scddon, J. MitcKenzlc, O. Hulchlnson and J. Duthie) thnt the private shareholders bad no capital m the biink m 1805. only as may be soon In the "Oazetteß,"

£500 t OOO of "capital payable by shareholders," that many of their shares were Bold at 2d each, some for nothing (as admitted by Mr. Allen), that many of .their shares were forfeited (proving that they were valueless — they were merely liabilities of £3 6s 8d per share), and thajt at one time (as admitted by Sir Joseph Ward) you could buy Bank of New Zealand notes -m Wellington at a discount, I think it was the private shareholders who ought not to have been "permitted" to get any more reserved profit*. The Lyttelton "Times" (June 23, 1909) said: "As far as the old shareholders are concerned, they practically lost all their capital before the State took control of the Bank." Yet Sir Joseph Ward said (November 12, 1913, Hansard): "In the interval that has elapsed since October 1894, the institution has earned In the shape of net profits between £5,000,000 and £6,000,000." During the same time the State made a net profit of less than £260,000! Speaking m Parliament on September 12, 1890, Sir George Grey gave me the credit of being the first m that House "to maintain what is truly a great principle, that the control of the currency belongs to us (Le. the State), and that the . profits of; the -whole paper currency ought to bo swept into itho Treasury." "The control of the currency" involves the keeping and guarding 1 of the coin reserves and banking securities. "The whole paper currency" means not only bank notes, but deposits and cheques, bills of exchange, etc That means the whole profits of the banking. Although Parliament may have intended to give the unlimited profits to the Bank of New Zealand "for all time"; and although the Bank of New Zealand Act of 1913 may have intended to give another twenty years State support to that bank, my opinion is there is nothing but the Proclamation to prevent the Government and people of New Zealand from transferring their accounts and their coin to any»other bank to-morrow. Why not to a State Dank for the profit and advantage of the people "Salus popull suprema est lex" — Tours, etc., J, MrLES VERRALL, Swannanoa, September 29, 1915. [Section 14, 189$ Bank New Zealand Act says: "So long as the said preferred shares shall be the property of the colony, they shall confer no right to convene, vote at, or otherwise take part m any meeting of dhe proprietors of the Bank." Therefore It will bff seen that 1595 and 1913 Acts are practically identical In thla respect, .Each of the directors, however, mny attend proprietors' meotings, but, unless holding .shares, shall not be entitled to vote. The Government Auditor may suspend the operation of any act or proceeding of such meeting until 28 days. The Go-vernor-in-Council may veto any resolution iiassed by the shareholders. Premiums on now capital are not profits from banking. The premiums on new capital go to tho reserve fund. No part of the reserve fund shall be used for payment of dividends without the consent of tho Minister of Finance.— Ed. T.]