PARLIAMENT.

Opunake Times, Volume III, Issue 122, 3 September 1895, Page 3

PARLIAMENT.

HOUSE of REPRESENTATIVES. Wellington, Thursday. BANKING BILL. Mr Ward moved the second reading of the Bank of New Zealand and Banking Bill, to make certain provisions in connection with the affairs of the Bank of New Zealand ; to further amend the New Zealand’ Bank Act, 1801, and the Bank’s deed of settlement; and to amend the Banking Act, 1891. He thought it was a matter for regret that when the Globo Assets Company was formed some years ago there had not beoif such reconstruction as would have proved more beneficial to all concerned. If the Government had not come to the assistance of the Bank last year it could not have carried on very long, and, in face of the commercial crisis that had at that time overtaken Australia, it would have meant a very disastrous crisis to the colony if the Government had not taken the action they had done. The Bill practically covered the recommendation made by the Joint Banking Committee, which meant that the colony should accept further direct responsibility with the Bank by subscribing £500,000 in preferential shares, and it was proposed to issue £500,000 of stock at interest of 8£ per cent. These preferential shares would rank second only to the two million of last year, and the colony’s total guarantee of two and a half millions would take precedence of all obligations of the Bank except amounts due to depositors. If the Government exercised the right of ordinary shareholders, they would practically have tbe control of the Bank, but this -was not desirable, as the time bad not arrived for the establishment of a State Bank in the colony. The Realisation Board would enable tbe institution to finally remove from its balance-sheet the great trouble that has existed for many years in the possession of estates belonging to the Estates Company. It was proposed to hand over to this Board the whole of the properties mentioned in the schedule of tbe Bill, and he should circulate amongst members the whole of the land tax values of those properties. He detailed the proposals with respect to the guarantee against loss of this Company, and said the Government proposed to put against the £855,000 deficit one million of called-up and uncalled-up capital. In addition to this, they would put the profits of the Bank to the extent of £50,000 a year, which would be paid to the Realisation Board. The directors estimated the earning power of tbe Bank at £135,000 a year. It was proposed that one million of the liquid securities reserved last year should not be reserved any longer, and it was contemplated to invest that amount in the ordinary way at four per cent, which would give to the Bank £15,000 a year. It was proposed to give the Bank power to purchase other bunking business, which would be £30,000 a year to the institution. The Government were, however, opposed to amalgamation, because it would mean further share responsibilities to the Bank. He explained in detail the various proposals of the Bill, as recommended by tbe Committee, and said he hoped the proposals would be accepted, as it was only by eliminating losses caused to the institution, and separating it from the properties that caused those losses, that the earning power of the institution could be arrived at. The losses caused by the Estates 'Company and the Agricultural Company were to be wiped off. Some members urged that the Government should take over the Bank, but that meant tbe expenditure of twelve millions of money. He would not hesitate to take the institution over if the colony had twelve millions to spare. He hoped, once and for all, a solution of this difficulty would bo effected. The Government did not wish to farce members, and the responsibility rested with the House. He said the proposals c6n* tained in the Bill were briefly as follow :—lst. We propose to release the second million, and thereby to effect a saving to the institution of £15,000 per annum. 2nd. To take the £500,000 preference shares ranking before guaranteed shares.' 3rd. To call up £500,000 of additional capital from the shareholders. 4th. To pay £50,000 a year to the Realisation Board. sth. To pay £25,000 a year to the shareholders upon the second £500,000 they arc to pay up. Gtb. To pay all the balances beyond the £75,000 — that is, the £50,000 to be paid to the Realisation Board out of the profits, aud £25,000 upon the £500,000 to the shareholders. 7th. To give the Bank power to purchase further banking business. Bth. The colony’s business to be done in England by the Bank. The lion E. Mitchelson congratulated the Joint Committee on their work, and although he could not support their proposals, he had no doubt they had conscientiously come to their conclusions. It would undoubtedly be a great calamity to the colony if the Bank of New Zealand was allowed

to close i!s doors. He d< dared the colony would receive no benefit whatever from the £500,000 preferential shares; aud the colony would also have to be prepared for the loss of at least tno million in the realisation of the estates. He thought the position of tbe shareholders in the Bank was most unfortunate. He could not see how the Government proposals would attain the object desired. He was of opinion that it would take a very long time to liquidate the loss sustained by realisation at the rate proposed by the Government (£BO,OOO a year). He had great respect for the Bank, and he did not want to do anything to injure it, but hoped the House would consider the whole matter carefully and impartially.

Mr Duthie denied that the Bank had a good business, and said it bad written off altogether £1,802,000. The shareholders would have to contribute everything by this scheme, without receiving any benefit from it. The proposals before the House showed no finality at all, and they would cause enormous loss to the colony. The Hon J. McKenzie said that the House came to the rescue of the Bank last year, not for the sake of the Bank, but to prevent a crisis occurring in tbe colony. The settlers of Now Zealand would be most injured if the Bank closed its doors. The merchants would be able to get whitewashed and start again, but the settlers ivould not be able to get rid of their obligations so easily. He declared that very few r financial institutions of the colony would be in a sound financial condition within a month of the suspension of the Bank. Mr Thomas Mackenzie questioned whether the bed-rock value of the estates had been reached. He considered (hat a great portion of the two millions was lost to the colony, notwithstanding what w r as said by the Government. He was strongly in favor of amalgamation. He would vote against the second reading of the Bill. Mr Buchanan (who was Chairman of the Bank Committee) blamed the Government for the present state of affairs, as the result of their action last year. As the least of tw T o evils, he thought the House should accept the Committee’s scheme. Sir Robert Stout said it appeared to the Committee there was a total deficiency of £2.193,188, aud, setting against that certain assets, there was a small margin of solvency in the Bank. If this were a private institution, he should say it was not w r ise to come to its assistance, but if the Bank were liquidated the colony would lose, altogether, from one million to a million and a half of money. The difference between the scheme he had submitted to the Committee and the Government scheme was (hat the colony was liable, as a guarantor, in the latter case, to the extent of three millions and a half, whilst under his scheme it w’ould only be liable for £850,000. If the Bank could be saved, it would be better to do so, even if at the end of nine years the colony had a million to pay for it. Ho felt the gravity of the situation, and agreed with Mr Buchanan that the House should choose the least of two evils. Mr G. W. Russell was one of those who thought the end of this matter must be that the colony must take over the institution as a St at a Bank, and he intended to move an amendment in Committee to that effect.

Mr Montgomery did not consider the proposals at all satisfactory, but admitted they would meet the case. He would vote against the amalgaliou clause.

Capt. Russell felt in a most awkward position to have to vote on what might be a momentous event in the history of the colony. In agreeing to the report of the Committee, he said the report contained the best expression of opinion they could arrive at. He was not enamoured of that report but it was the best they could furnish to the House. He had endeavored to carry in Committee a resolution to have the evidence of the bankers and business men as to the effect of the suspension of the Bank, but that was deemed not to be in order of reference, and was not allowed. He felt it was the weak spot in their report not to have expert'evidence on the other side. It was a question as to whether the Committee had provided a final remedy in their report, but he believed they had at any rate postponed the evil day for a good many years to come. He had been an antagonist to the purchase of another Bank, but they might rest assured the Directors would not sanction the purchase of any institution whose business was not of a good character. Mr Bell thought all this talk about the Bank going down was a “ bogey ” and a scare as it was last year, and he felt it was greatly exaggerated. That being his opinion he hoped the Bill would be rejected. Messrs Collins, Baddon, W. Hutchison, Allen, Flatman, Millar, Wi Pere, Carncross, Hone Heko, Mastiu, Saunders, and McGuire also spoke. Mr J. W. Kelly moved as an amendment that the Bill be read a second time that day six months.

Mr Goo. Hutchison seconded the amendment and said the Bank was now applying practically for its fourth reconstruction within seven years. If the Bank was allowed to close its doors beyond the dislocation of trade for a few mouths, he believed injury would be of a most transitory character. Mr Seddon said nothing had been kept back from the Committee. The directors of the Bank had concurred with the Committee’s proposals, aud regarded them as such would place the Bank on a sound footing. The Bank was just solvent, and with better prices and more prosperous times would pull round.

Mr Kelly’s amendment was lost by 40 to 15.

Mr Ward replied at 5.80 a.m. Ho believed the time had come when a State liauk should be established in

' New Zealand and also in (he o’her Australian Colonies. The < nly d're..t liability the colony would be saddled with under the proposals was £17,500 per annum for interest on tiro preferential shires. Tbe Government were trying to save the country but not the Bank. The second reading was carried by 35 to 20, and the committal set down for 2.30 p.m. to-day. The division on the second reading of the Banking B>ll was—Ayes, 35 : Buddo, Cadman, Carncross, Caruell, Carroll, Collins, Crowther, Flatmau, Fraser, Guinness, Hah, Harris, Hogg, Houston, Kelly, W., Lawry, Maaliu, McGowan, McKenzie, J., McLauchlin, Meredith, Millar, Mills, Montgomery, Monison, Parnta, Pore, Pinkerton, Russell, G. W., Seddon, Stevens, Ward, Willis, Thompson, T. Noes, 20 : Allen, Bell, Buick, Duthie, Earnshaw, Hall-Jones, Hutchison, H., Heke, Hutchison, W., Joyce, Massey, McGuire, McNab, Mitchelson, Pirani, O’Regan, Smith, G. J.. Tanner, Wilson. Pairs—Ayes : Smith E. M., Reeves, Russell, W. R., Buchanan, Stout, Green, Mackintosh. Noes— Graham, Thomson, R., Kelly, J. W., Larnach, Newman, Te Ao, Lang, McKenzie, T. In Committee on the Banking Bill, the proposition to strike out Clause 10, which makes it incumbent upon the directors of the Bank to call up the final third of the reserve liability was lost by 57 to 7 and the clause retained On Clause 19, Mr G. Hutchison moved an amendment that the price of estates should be £1,879,000 instead of £2,731,000. The amendment was lost by 40 to 19, The salaries of members of the Board were reduced from £ISOO to £IOOO to bo divided amongst the thi’ee. It was provided that before an amalgamation contract could be ratified Parliament muit have an opportunity to dissent from it. A new Clause is to to be added extending the Bank Note Issues Act, 1893, for one year. A new clause was added that no officer or official of the Bank, Estates Company, or Realisation Board be allowed an overdraft. The Bill was finished in Committee, and at 8.40 a.m. it was reported as amended. The House then adjourned, the third reading being fixed for 2.30 p.m. Wellington, Monday. The Bank of New Zealand Guarantee Bill passed the third reading on Saturday.

(By Telegraph.) Wellington, This Day. The Bank Bill passed the Upper House last night by a large majority. THE FEELING IN LONDON. London, August 29. • The summary of the committee’s report on the Bank of New Zealand cabled by Dalziel’s Agency, has created surprise and consternation amongst shareholders at Home, especially in view of Mr Ward’s assurances of improbability of farther calls being made upon them. The officials doubt the accuracy oi certain of the figures as telegraphed.