THE BANK INQUIRY.

Otago Daily Times, Issue 10589, 5 September 1896, Page 5

THE BANK INQUIRY.

(Tex Uniteb Pbess Association:)

Wellington, September *, The Howie Banking Committee resumed at 11 a.m.

A number of questions were handed in by members of the committee to be submitted to Mr John Murray, at Sydney, for his replies thereto. It was decided that the consideration of the questions be deferred until tomorrow. ■ *■■ •■

Mr Watson produced a statement showing the proximate cost of floating and redeeming the Estates Company's debentures. From tbis ratura it appeared that the debentures were issued at b_ per cent, on July 28. 1890, and were redeemable on December 31, 1910, at 103, or at- any time' prior to tbafc on ail months notice at a premium of 105. The cost of float* ing the £1,500,000 worth of debentures was £305,286, "and! in. addition to. the loss of capital. there was the loss on account of paying;the excessive rate of interest of 5_ per cent, and fees, kc. There were also debentures floated for thc Auckland Agricultural Company. With regard to what had been said yesterday about the value of •sheep on the Estates Company's properties, Mi* Watson produced a statement showing that Mr Foster's valuation of the 31st March 1893 was £148,984-. The amount written down at that time was £94,063, and the amount written up was £83,380. By some mistake, witness explained, the amount written up was about £11,000 less that the amount written down. The examination of Mr Watson by Mr Seddon was resumed. Witness stated that the Estates Company waß formed for the purpose of taking over the bad accounts of the Bank of New Zea-. Jand, apd he promised to produce a return showing all the accounts taken over since the formation of tha company. The attorney of the Estates Company wonld not allow any writings down:on the book value.of sheep when they took office^ Mr Foster wished to write down their value as stated, but the attorney declined to allow this. Witness could-sot say of his own knowledge whether anything had been written down for depreciation in pasture on the stations. Mr Johnston, chairman of the board, would be in a better position, to give the information. Witness could not say why the Estates Company took up half the shares in the Matamata property for £81,649 when the property tax value only amounted to £53,342 (according to a statement produced by the Premier). The company from which the SSatamata estate was taken over was then indebted to the Bank bf New Zealand to the extent of £285,000. Witness knew, nothing of this Matamata transaction. With regard to the value of produce snipped Home from the properties of the Estates Company—stated to be £90,000,— witness said legal advice was thafc it could not be treated as income until the money had been actually received. If debentures were issued ■gainst this ptoduce the Government would be responsible for the payments? interest oh them unless the Assets Realisation Board was able'to provide for it. The members of the Assets-Realisation Board had practically had charge, of. the estates since the end of last year, He had not tho figures showing the outgoings and incomings of the Estates Company last year. He had not a copy of Mr Butt's certifieatej which the Premier said showed that the outgoings had exceeded the incomings by £33,089. The Assets Board last yea)*, he believed, had made about £58,000. -Messrs Johnston and Booth made a visit of inspection of the stations of the Estates Company about 18 months ago, and, although they made no formal report to the board, their visit led to alterations being made in the financial arrangements of several of the properties. Mr Foster was a 'director of the Wellington Meat Export Company, but witness did not consider that this affected his position as manager of the Estates Company also. ,■_. The two large eompabies had had large business transactions with each other. Mr Booth, one" of the attorneys of tbe Estates Company, was also chairman of directors of ..the Wellington Meat Export Company; Since .the appointment of Messrs Booth and Foster to tha Estates Company,: witness did not, think the company had had any dealings with the Wellington Meat Company. Ib was the Assets Board who had the dealings. He did not, think Mr For.ter'6 position on the Assets Board and Estates Company clashed. If they did so it w«b unavoidable,* as they could not under the'circumstance*! have a manager for each. : "7* ''.--...-'

This concluded the Premier's examination of Mr Watson. Under re-examin-tion by Mr "Montgomery,' Mr Watson said the special auditors—Messrs Kember and O'Hara Smith—iu their report referred to a shrinkage of £66,913 in tha valua of .sheep on the Estates Company's stations, hut witness had not sufiicient knowledge of the matter to aeoounfc for this shrinkage. Mr Montgomery asked whether the effect of placing dead assets in tbe Estates Company would not be to show a misleading balance sheet for the bank.-' Witness said that' wonld depend on the values placed on them iu the books. Tho Estates Company was formed as a burying ground for the dead assets of the bank. He did not Say,, however, that this had 'alwayii been since done. Mr Montgomery said it would be an easy method of paying dividends to pay tho bad debts of tho bank into the Estates Company and so benefit the bank profit and loss account.

Witness said this was so, but he did nob think it had been done. Witness (continuing) eaid there was ho £150,000 advanced to the Colonial Bank by the Bank of New Zealand. He declined to disoloso the business of the Government in regard to ths transaction of the purchase of. £150,000 of Government consols. Mr Montgomery asked whether witness did not think'that transaction made the Government interested iu the stability of the Colonial Bank?

Witness again declined lo answer questions .relating to the disclosure of private business Witness (continuing) eaid the reason Messrs Buller and Litchfield were given three years' engagements as inspector-; of the Bank of New Zealand was because of their services in connection with the banking amalgamation. He had suspicions, however, that there were other reasons. Mr Montgomery asked what these suspicions were? '

Witness emphatically declined to disoloso his suspicions. He was not going to give his suspicious as. evidence. Witness (continuing) said he was not afraid of the information these inspectors -had obtained during tbe Colonial Bank transactions. . So far as witness knew the officers did not ask for three years' engage-" ment. There had been no quarrels among the directors, and the only case in which dissent was reported ou the minutes was where. Mr Booth objected to the appointment of Mr Henry Mackenzie as general manager. The management of the hank was not Injuriously affected by any dissent that might exist among the directors, because dissent existed on every board. ' The dissent on the Bank of New Zealand board was no greater thau that which existed ou any other board.

At 1 p.m. the committee adjourned till 10.30 to-morrow, when the first business will be the consideration ol question* to be submitted to Mr Murray.

The Premier stated that the committee would not sit on Monday, as he would be Absent tit Palmerston North.