BANK OF NEW ZEALAND.

Otago Daily Times, Issue 18141, 12 January 1921, Page 2

BANK OF NEW ZEALAND.

TO THE EDITOR. Sxe, —With reference to the letter signed “Compulsion” in your issue of yesterday, the lack of criticism of the I)ank of New Zealand Bill has been rather surprising. To me the Bill appears to be legalised profiteering.' I understand that every shareholder win receive ten £1 shares in lieu of each nominal £6 13s 4d share, which ho at present holds—in other words, his holding is to be gratuitously increased 50 per cent. As the bank paid a dividend last year of 17i per cent, every shareholder will in one year receive 67i per cent, profit or dividend on his nominal holding. If this is not profiteering, what is? Further, if the bank pays 17i per cent, dividend next year on its enlarged capital each pre-reconstruction shareholder will on his actual capital receive a dividend of 261 per cent. Mr Massey has stated that the action of- the directors in issuing the new shares in denominations of £1 proves their desire to ’‘democratise” the bank. As the present shareholders have the first option on the new shares, and as thebank being such a good paying proposition it is certain that the shareholders will absorb the whole of the new issue, leaving none for the outside public, I don't feel that I am being at all rude in terming Mr Massey’s statement sheer bunkum. Granting the necessity to increase the bank’s capital, had the Bill been drafted in tfie interests of the common weal it ‘would have stipulated the following conditions: — 1. The capitalisation of reserve fund absolutely prohibited. . 2. The now issue to be raised by public auction. 3. Limitation of rate of dividend (say, to 10 per cent., which is surely ample) and of moneys placed to reserve fund. Under these conditions we could have reassembly expected a lower bank rate, and a resulting increased prosperity for our country. The present Act will have the effect of putting inordinate profits into the shareholders’ pockets, thus keeping the bank rate unduly high and hampering the growth of existing businesses and the creation of new ones. — I am, etc.. Tomahawk,