THE DEBATE IN THE HOUSE OF REPRESENTATIVES.

Otago Witness, Issue 2106, 5 July 1894, Page 21

THE DEBATE IN THE HOUSE OF REPRESENTATIVES.

When the House of Representatives resumed at 8 30 this evening,

The Bank of New Zealand Share Guarantee Bill was received by message from the Governor, and read a first time.

The Hon. J. G. WARD moved that Standing Orders be suspended in order to enable the bill to pass through all its stages. In rising to move the second reading of this bill he need hardly say that it was a matter of great urgency. Hon. members on both sides of the House would realise that a grave responsibility had been placed upon the Government iv this matter, a responsibility which be himself felt keenly. It was a responsibility, he would inform the House, that could not be taken were it not that the necessities of the present financial situation demanded it. The proposals now before the House were of a most important character, because they dealt with the concerns of one of the foremost financial institutions in this colony. It could not be questioned when hon. members were made fully aware of the exact position of affairs that the step the Government were now taking had been rendered necessary ia the general interests of the country, because it was necessary that in New Zealand at the present time we should hare firm and unmistakably sound financial stability, and this applied more particularly to the bank which now and for so many years conducted the financial business of the colony. He reminded hon. members that only a short time had elapsed since deplorable exhibitions of financial disaster which swept over the adjacent colonies. It was the desire of the Government to prevent such a finaucial disaster overtaking this colony, and this being so, hon. members would sympathise with the Government in the responsible position they were this night placed in. Last year untoward influences of an unprecedented character had been at work in this colony which had created a lower standard of value of our exports than had ever before existed, and in addition to these there had been a bad season for colonial products — two unfortunate elements which had worked greatly against the prosperity of the country. These adverse circumstances, which had told so severely on the country, had been directly reflected, he was sorry to say, on every important financial institution in this colony. It had therefore told severely upon the great financial institution with which the Government account of the colony was kept, and which, as it was well known, had done the largest bankiug business in the colony. With an tamest regard for the welfare of the country, the Government had recently felt it incumbent upon them to place themselves iv communication with the confidential representative of the Bank of N< w Zealand, a gentleman whose long experience, knowledge, and mature judgment warranted the Government in placing great weight on his opinion, which after mature -consideration had been conveyed by him to the Government. The Government deliberated long and earnestly up >v his opinion, and the whole matter generally, and ultimately decided it was essential in the public interest Ibat effective action must be taken without delay. He said the public interest, because the Government recognised, as every honourable member mutt recognise, that no person nor company in this colony, no matter how important the business conducted, was entitled to assistance at the expense of the taxpayer, and he gave an assurance that it was not the intention of the Government in introducing this bill to place the taxpayers of the colony in such a position. He asked hon. members to dismips from their minds the past career, management, *nd connections of the Bank of New Zealand, and to take in the full importance of the present situation. In telling the House that the future of this institution was in their hands, he t aid that the House had also ia its hands, to a very large extent, the success or failure for some years to come of the colony's industrial enterprises. Tbe colony's ramifications and financial connections were inseparably bound up for good or evil with that institution. They must not forget that this bank was a public institution, and therefore its position was at all times a matter of public concern. The question was, Should the Government allow this unsatisfactory state of things to continue until it became absolutely dangerous ? They had to go to the right or to the left, and the Government had decided to go to the right and take the House into their confidence, and the House must now be responsible for the issup. Iv order to show them the full gravity of the position he read a confidential letter from a gentleman who was the confidential representative of the bank here at the present time, and who had been requested by the directors to step in and assist them. The letter stated among other things that by what was proposed he was absolutely convinced that the State would not lose one penny, and that by this measure the banking affairs of the colony would be placed on a greatly improved footing for the future. He added that if the Government finally determined to go on with the measure it should be put through that day. The Colonial Treasurer went on to say that in view of this important communication the Government had the responsibility thrown upon them of acting in the general interests of tb> colony or remaining passive, Tbe course

proposed was a bold and effective one, and the only one which was open to the Government unless they decided to remain ' inactive. He predicted that it would be a thoroughly adequate course, which would prevent any recurrence of the present situation. The essence of sound ii nance was good credit, and what the Government now proposed to do would preserve this good credit, based as it was on sufficient resource of capital and prudent management. The Government after going into the matter thoroughly and exhaustively found that the bank's capital required enlarging. The representative of the bank had informed the Government that the directors themselves had contemplated an operation to have this effected, but owing to the reflex of the financial disaster which took place in the other colonies upon London and the foreign market, it had not been found practicable. The House would observe that the colony was asked to guarantee preference capital to the extent of £2,000,000. This appeared a startlingly large sum, but he would remind them that they were dealing with the finances of an institution of great magnitude, the assets of which amounted to a sum of 11 millions. The Government were at first disposed to reduce the amount in the bill to one million, but the representative ef the bank was perfectly frank and open and said that this would be inadequate. His arguments were so conclusive that the Government felt that no other course was open to them than to guarantee the two million preference shares —one million to be at the bank's disposal for the purposes of its ordinary business the other million to be held in reserve and invested in such manner as the Colonial Treasurer shall approve. The House had a right to know how the measure proposed to guard against a recurrence of the present state of things in the future. The condition of the guarantee was that it should be released at the end of 10 years, the Government would during that time have full supervision over the transactions of the bank through the auditor, who would be appointed and who would devote his whole time exclusively to the bank, his salary being paid by the directors of the bank. The Government moreover had power to refuse sanction to business of an unsafe or objectionable character. Another important advantage would be the provision for having the head office of the bank in Wellington. The hon. gentleman concluded by saying he felt sure this measure would receive the support of all sound-thinking men on both sides of the House as being calculated to put the finance and industry of the country on a stable footiDg, and to promote that confidence which is the foundation of enterprise. Captain RUSSELL said this was an occasion in which it would be recognised there should be no attempt to gain a party advantage, but to approach the question with a grave sense of duty. There was one paragraph, however, in the Governor's Speech which said the position of New Zealand was eminently satisfactory, and he thought it a pity that Ministers, knowing what they must have known, only a week ago should have put such words into his Excellency's mouth. In expressing his views he was not expressing the views of any party in the House, although he might possibly be giving expression to the views of those on his own side of the House. He contended that no member of the House except those on the Government benches exactly understood the nature of the bill. They were asked to guarantee two millions of money under the bill, but he should not withhold his consent from it. A responsibility was placed on one in such a matter, and by refusing to agree^ to a bill of this kind one might be producing a great disaster. He had carefully considered the matter, and he had come to the conclusion that even a guarantee by the colony of two millions of money was not such a great disaster as would be caused if the Bank of New Zealand had to close its doors tomorrow. He thought at the same time a heavy liability would fall on taxpayers by this bill. It seemed to him they were in great danger of establishing a State bank by the bill, and he was distinctly hostile to a State bank. It would be better if they had a little more time to consider the bill, but the entire responsibility must rest with the Government, and he sincerely hoped that what they were now doing would prove beneficial to the colony.

Mr GEORGE HUTCHISON said this was a Loan Bill for two millions, which were not to be used by the colony, but by an institution, for which £80,000 a year would have to be paid in interest. The Government asked the House to pass this measure through all its stages that night, but he suggested that the Colonial Treasurer on the motion for the bill going to Committee should refer the bill to a committee, and the House might adjourn for an hour or two. They then would be able t& give morp consideration to the bill than they could possibly do at such short notice. He hoped Mr Ward would agree to this course ; if not, ho should feel compelled to propose such a course him°elf . If that was not agreed to, then a double responsibility would rest with the Government.

Mr T. Mackenzie, Dr Newman, and Messrs Buchanan and Hogg also spoke on the bill. Sir R. STOUT said he saw no reason whatever for sending the bill to a committee, as proposed by Mr Hutchison. They had the assurance of the Colonial Treasurer thab the bill was urgently required, and if the bill was to pass there was no occasion to waste any unnecessary time over it. He had intended to speak at length on the bill, but he recognised that the matter was one of great urgency, and if they called 20 committees to consider it they could not get any more information about the bill than they had already got.

The Hon. Mr SEDDON said the Government were asking Parliament to accept a grave responsibility by the bill, but a crisis had arisen which it was necessary should be met. He complimented the Opposition on the manner in which they had received the bill, because they had not the information at their command that the Government had. He could not see what a committee could do in the matter as proposed by Mr Hutchison. When information came to the Government that if relief were to be given at all it must be given at once, he thought there was no reason for the bill being referred to a select committee. There was no committee appointed last session to deal with the bill affecting banking interests which the Government passed through the Hou^e. Referring to Captain Russell's remarks about the paragraph in the Governor's Speech about the satisfactory condition of the colony, he said that at the time that Speech was written they had every reason to congratulate themselves on the prospects of the colony, but this present crisis had suddenly aripen, and it was for the House, by passing the bill, to dispel this cloud. It they did so it was his firm opinion it would redound to their credit and be beneficial to the country. He assured the House that the Government had not taken this responsibility without the most careful consideration, and he hoped the bill would be passed without referring it to a committee.

Mr DUTHIE complained that the House was taken by surprise in this matter. The Government had no right to keep back any informs » tion at their command respecting the present crisis, and that information should be at the disposal of the House,

Mr BELL said the Government were responsible for the statement that the affairs of the bank were in the stabe that they described ; they were also responsible for the statement that if the bill did not pass great ruin would fall upon many people in the colony. They were, therefore, responsible for passing auch a bill as this, which he (Mr Bell) took no responsibility whatever for. He was prepared to vote for the bill, and if the circumstances of the bank were such as the Treasurer had described, the Government were deserving of credib rather than otherwise in bringing down the bill.

The Hon. Mr WARD replied briefly. Ho saw no good to be gained by referring the bill to any committee. If the bill was delayed till to-morrow morning, as suggested by some hon. members, then the House would not be asked to go on with it at all, and the responsibility must then rest with those who delayed the bill. The motion for the second reading of the bill was agreed to. On the motion for the committal of the bill, Mr G. HUTCHISON moved that the bill be referred to a select committee, and that the committee should report on it that night. He contended that the House should have more information before passing this extraordinary bill. The amendment was lost by 51 to 8, and the bill ordered to be committed. The Bank Shareholders Bill and Bank Note Issue Bill were read a second time without debate and ordered to be committed. Clause 5 of the Bank of New Zealand Share Guarantee Bill was altered so as to make it permissive in the direction of levying £500,000 of reserve capital, and at the request of the Colonial Treasurer. The three bills passed through Committee, were read a third time, And passed. June 30. The House, which had adjourned at 11.45 p.m. to await the return of the bills from the Upper Chamber, resumed at 4.5 a.m. A message was received from the Legislative Council to the effect that the Council had passed the three Bank Bills without amendment. The Hon. Mr Seddon moved that the House do now adjourn. In doing so he said Parliament had risen to the emergency which had arisen, and he felt sure the bills that had been passed would be for the good of the colony, which had been saved from pooible disaster. Mr George Hutchison could not altogether agree with the Premier, bub the responsibility rested with the Government. The House rose at 4.10 a.m. Great interest was taken in the proceedings in the Legislative Council throughout the passing of the bills (particularly the Bank of New Zealand Share Guarantee Bill), and up till the hour of adjournment the galleries in that Chamber were crowded, the majority of the onlookers being merchants, bankers, and other commercial men.