AMALGAMATION AND THE COLONIAL BANK.

Otago Witness, Issue 2167, 5 September 1895, Page 21

AMALGAMATION AND THE COLONIAL BANK.

August 31.

It was about baif-past 3 this morning that clause 36 wm reached. The c'anss provides for the repeal of section 3 of "The Banking Act 1894," and gives the Bank of New Zealand power to purchase other banking business. Mr Q. W. RunteU moved, to test the Committee, that the provision for lepealing section 3 of the Act — which if done w»uld prevent «ny such amalgamation — be struck oat; *nd during the diicusiion oa amalgamation or* purchase the followirg occurred. After a number of members had expressed disapproval of ftm«lgamat ; on, the CMonial Treasurer, referring to a statement fey Mr R. Thompson that th« bill showed the hand of the Hon. G. M'Lean in every olansc, said Mr M'Lenn cover saw the bill, end its contents were entirely unknown to him. Jin to himself, no member of the House or the oommi'tee— -(hear, hear) — could say be had approached them as to tbi* matter. — ((Applause.) Over 18 months ago the then directorate of the B*nk of New Zealand recognised that it was ab-olutely imperative that it Should obtain further earning power, and overtures were made to another bank, not the dotanial, for the purchase of its business, tonfortutjately those overtures were Dot successful, but the same causes which actuated the late directorate led the present directorate and the committee to recommend a pu rebate. The amalgamation proposals of la«t year emanated from the Bank of New Zealand, not from the Government. Th«y were pressed by Mr John Murray in the interests of the Batik of New Zealand, not of the Colonial B*i'k or the GovernuiPut, and the negotiations arrived theu at a point which, in view of what occurred After, it was to be regretted they had arrived »t. The present scheme waß dependent upon the carrying out of the purchase provision, and rhould that not be atflentwd to the scheme would have to be recoacidered. He suggested an amendment providing that the contact for purchase be nuV»jtot to the Approval of Parliament, tbe approval to be obtained by the laying of the propoied contract on the tables or both Housei. Should no resolution disapproving of the contract be gassed by either House it be given effect to. fcfr Bt-11 suggested that perhaps the contract night be put on the table in the last days of Parliament. The Treasurer (aid no iuoh trick xreuld be attempted. Mr G. W. jßu*Btll s«id the amendment would not affect his amendment, which he would press. A lot of discussion followed, in the eou«e of "which Mr R. Thompson said after diecutsing the bill so long they found it was but watte paper if clause 36 were not passed. The wbole thing was humbog. I ast year he followed felinisters ; now ha found the information th»y gave h'm was false, and th«t Miniflters were in the hands of men much cleverer than thornpelves. Mr Flatmnn said the earning power of the Colonial Bank had been written down by *he committee from £45,000 to £30,000 as a Safeguard. Mr Buddo s»id that no sane man could imagine that ths Bauk of New Zealand iouW purchase a bank having an e«ruing power of £30,000 a year without paying for it, and .£30,000 a year capitalised would be £750 000. The bank had no need for any more money. Its troubles had arisen from a plethora of money,

Clause 36, section of "The Banking Act 189+'' repealed.

Mr G. W. RUSSELL moved to strike out the portion of the clause that allowed the amalgamation of two institutions. He moved this amendment as a tist to ascertain whether the Committee were or were i>ot .in favour of the amalgamation of the two banks.

Mr MONTGOMERY could not support any such amalgamation without the consent of Parliament.

The Hon. Mr SED©ON said members must not be led away by the statement made reckiesily throughout the colony with reference to the Colonial Treasurer, and which ought never to have been said about him, in connection 'frith another banking institution, and they must remember also the fact that under the toroposal to purchase that institution, with a mew to increase the earning powers of the Bank of New Zealand, the Colonial Treasurer mould, in consequence of those assertions that Lad been made, take care to have everything done iv that connection done in a perfectly straightforward manner. The necesfity for the purchase of some additional earning bower for the Bank of New Zealand was Apparent to all the members of the committee, who had specially made the recommendation. A great portion of the lcsies pf the Bank of New Zealand were due to the fact that there had been excessive competition, OMd this competition had done none of the institution* any good. It was necessary this clause should be carried in the interests of th«

bank, and he trusted Mr Russell's motion would not be supported.

Mr FRASER said when he went on the committee he was prejudiced against any interferenct with other bank* either by amalgamation, purchase, or otherwise, but alter hearing the evidence that came before the committee it had convinced bim of the absolute desirability of amalgamating with other banks. Captain RUSSELL thought that the amalgamation with the Colonial Bank was a mo*t necessary, feasible, and justifiable proposal. One reason that confirmed him in that opinion was that the president of the bank was an old officer of the Colonial Bank. Tho president of that bauk was before the cimmittre, and they had before them tbe auditor of the Colonial Bank. They were loyal to the institution, and spoke in such terms of the bank that the two of them hud been with, and their opinions were in hifl opinion so valuable that they had convinced him tbftt tbe purchase of the business would b« thoroughly justified, and a satisfactory solution of the difficulty of providing -the Bauk of New Zealand with more earning power. He preferred to take the opinion of »uch men ai he mentioned on all matters of finance to tho co'lective opinion of the House.

Mr STEVENS urged that before amalgamation was effected the scheme ahould have the approval of Parliament.

Mr BUDDO considered they should put the Baok of New Zealand on « sound footing before they took over the Colonial Bank. He objected to any banking monopoly.

Mr THOMAS MACKENZIE said those who voted for the second reading of the bill should assist the Government to carry out the committee's Bchf me in its entirety."

Mr R. THOMPSON strongly oppesed amalgamation.

After further discussion,

The Hon. Mr WARD said, in reply to a remark by one of the speaker?, that the Hon. Goorgo M'Lean knew nothiDg of the bill, and had not seen it before other members. He (Mr Ward) desired to remove the impression tbat Romtthirg improper w»s being attempted in thifi matter. Over 18 months ago the Bunk of New Zealand rf cognised it was absolutely im}.er*tive to obtain the business of some other restitution, and overtures were then made to aaother institution, not the Colonial Bank. It wan unfortunate those negotiations came to nothing. The same reasons actuated the committee. An extraordinary impression was abroad that iv the event of purchase a largo sum of money would be han-ied over. This was incorrect. The Colonial Bank had £500, 000. in casb, and the purchasing bank would havo to take this over. The coin of the selling bank would bo the coin used in miking the purchase. The ,inti rests of tbe Bank of New Zealand would be specially conserved in this matter. Only good accounts would be taken, and the selling institution would have to satisfactorily provide for alt its bad and donbbful debt*. Ho agreed that a-nalgMnation must only be with the assent of Parliament, but it would be impracticable to have the negotiations held over, say, for 12 months in order to bring them before the House. Last yew's amalgamation proposals were hardly pressed by the Bank of New Zealand with the object of securing more earning power. Matters had now reached a stage that it would have been better if last year'a negotiations had never been entered into. This clause embodied one of the mo*t important portions of the scheme, and to nrgntive it meant reconsideration of the whole scheme. Amalgamation w»s one of tbe strongest recommendations of the directors of the bank, and its rejection would put a different fspect on the whole question. In order to e»f«gu&rd the interests of the colony and enable every member to feel the pense of security they apparently sought he suggested an amendment providing that the contract for the purchasa be subject to the approval of Parliament, that to be obtained by the laying of the proposed contract on the table of both Houses, and should no resolution disapproring of the contract be passeJ by cither House it be given effect to.

Mr G. W. RUSSELL said the amendment would not affect his amendment, which he would press to tbe ultimate issue. The £30,000 revenue anticipated was not of such urgency <m< members represented.

Mr CROWTHER condemned the proposals, whioh apparently mennt propping up another bank.

The Hon. Mr SBDDON said the Government w«re endeavouring to undo wrong* done by former directors who lived in Auckland They must have amalgamation, otherwise their legislation would be ineffective, as it would merely increase the charges on the Bank of Nrw Zealand without increasing its earning power to meet them. Tho discussion procpeded at groat length.

Mr R. THOMPSON declared the whole thing bad been planned and arranged before Parliament met, aud was the scheme of the Colonial Batik.

At 415 a.m. the House divided on Mr Rnsself s amendment, which was rejected by 34 to 24.

The following is the division list : —

Ayes (24).— Messrs Bell, Ihi'ldo, Buick. Camcro«s, Crowther, Earnsbaw, Graham, Hall-Jones, Hekt, W. Hutchison, W. Kelly, Lang, R. M'Kenzie, M'Nab, Meredith, Witchelson, Montgomery, G. W. Russell, Saunders, G. J. Smith, Steward, Tanner, R. Thompson, Wilson. Nobs (34).— Measis Cadman, Camell, Carroll, Collint, Duncan, Flatman, Fraser. Green. Hall, Harris, Hogg, Houston, J. W. Kelly, T. Mackeszie, ftiaslin, Ma.-sey, M'Gowan, J. M'Keime, M'Lachlan, «Millar, Mills, Morrison, O'Ke^au, Farata, I'ere, Pinkerton, Pirani, Reaves, W. R. Russell, Seddon, E. M. Smith, Stevens, T. Thompson, Ward. Pairs.— Ayes: Messrs Allen, M'Guire, Duthie, Lawry, G. Hutchison. Noes: Messrs Guinness, Mackintosh, Willis, Stout, Buchanan.

The Hon. Mr SEDDON moved an amendment in the second line of the clause providing that the contract should be laid on the table of both Houses whilst Parliament was in session, and unleis within 14 days a resolution disapproving of the contract was given notice of, the contract would bo deemed to be approved of by Parliament ; but if notice of motion was given the c .ntract should not be deemed to be approved of until the motion was disposed of.

AN INTKHKUPTION.

At this *t<*rcthe ACTING-CHAIRMAN (Mr Joyce) ruled H-jne Hoke out of order for introducing irrelevant matter in speaking on the motion that the Chairman leave the chair.

Several members questioned the correctness of this ruling, holding that previous rulings hud been that a member could traverse the whole question on a motion that the Chairman leave the chair. Mr M'NAB moved that progress be reported, in order that the Speaker's ruling be obtained on the point. The PREMIER objected to this course, and a long discussion ensued. Member generally complained that their privileges were being curtailed. The Hon. Mr SEDDON said the motion came from those who were opposed to the bill. Mr M'NAB disclaimed any intention to obstruct the bill. The division resulted : Ayes, 28 ; noes, 28 . Mr JOYCE gave bis catting voft with the

ayes, and having vacated the ohair, related the circumstances of the incident to the Speaker, and asked his ruling.

Sir M. O'KORKE said that the new Standing Orders took away the privilege of extensive range of discussion on the motiou to report progress and leave the chair, and the Chairman of Committees waabouod t:> restrict the debate to these particular motions. Some latitude had to be allowed, but when these motions had a tendency to delay businoei, the duty of the Chairman was to enforce this ruling.

PAELIAMENTARY SANCTIOK A CONDITION.

The House, havisg resolved itself into Committee on the bill again, the discussion on the Premier's motion was continued.

Tho Hon. SEDDON said he was positively assured there wm absolutely no truth in the statement that the amalgamation contract was all ro*dy. The QoTornment had not besn actuated in this matter by other motives than a desire to do justice to the country.

The Hon. J. M'KENZIE declared there was do such agreement in existence so far as any member of the Ministry knew.

At 6 a.m. Mr Seddon'g amendment was agreed to on the voices, and the clause as amended was added to tho bill.

Clauses from 36 to 48 passed without material amendment.

Ou clause 49,

Mr B. M'KENZIE moved to excite the power of veto conferred ou the president in regard to resolutions of the committee of the board of directors and the resolution of a meeting of proprietors of the bank.

The Hon. Mr WARD could not accept the amendment, which wu lost on the voices, and the clause piseed unaltered.

The remaining clauses passed with slight amendments.

NEW CLAUSFS

A ccv clause was added, on the Hon. Mr Ward's motion, extending the provisions of "The Bank Note Issue Act 1893" for one year.

Mr DUTHIE moved a new clause, tbat no director or efftaial of the bank, Estates Company, or Realisation Bjard be allowed an overdraft. — Agreed to.

Dr NEWMAN moved a newclausp, applying thy Disqutlifioation Act to all appoint raenta by the bank and Eitates Company. — Lost by 31 to 19. . Mr G. J. SMITH meved a new clauee, that neither the bank nor Estates Company, after the expiration of five years, shall carry on any trading business.

The Hon. Mr SEDDON said this proposal was brought forward at the instance of private companies who were in competition with the Estates Company.

After considerable discussion,

The Hon. Mr WARD suggested, as a compromise, that the clause should be made for a general term, fixed for seven years.

Mr SMITH accepted tha compromise, and withdrew bis clause on the understanding that it wonld be inserted in the Council.

THE BILL KFPORTED,

This fiuished the bill in Committee, and at 8.30 a.m. it was reported as amended, and the third reading fixed for 2.30 p.m.