The Pahiatua Herald. with which is incorporated THE PAHIATUA STAR. Published Mondays, Wednesdays, and Fridays. MONDAY, SEPTEMBER 17, 1894. THE BANK AMALGAMATION.

Pahiatua Herald, Volume II, Issue 203, 17 September 1894, Page 2

The Pahiatua Herald. with which is incorporated THE PAHIATUA STAR. Published Mondays, Wednesdays, and Fridays. MONDAY, SEPTEMBER 17, 1894. THE BANK AMALGAMATION.

Wr publish in another column the brief details of the proposed scheme of amalgamation between the Bank of New Zealand and the Colonial llank, which wore made public on Friday last. There are three interests involved in the transaction, tho interest of the State as guarantor of the Hank of New Zealand, the interest of the shareholders of the Colonial Hank and the interest of the shareholders of the Hank of New Zealand, and of these three interests paiainount consideration has been given to the protection of the shareholders of the Colonial Hank. With the specially favorable terms accorded them, it causes us no surprise to learn that the Colonial Hank shares have advanced within a very short period from 15s to 80s. It is a huge piece of < ffrontery to ask Parliament to ralify a scheme which in effect proposes to give to the shareholders of the Colonial Bank s, certain dividend of (! P'-r cent, per annum without a sein tilla of liability. If the scheme of

amalgamation is carried out the Colonial Bank, or B shares as they will l)p known, will bo worth a premium, while the Bank of New Zealand or C shares will not he worth the paper they are written on. The shares of the Colonial Bank are to he taken over at par \ line (L’2), and except in case of deficiency in tho liquidation of the rejected assets, are to be considered fully paid up and to carry no liability whatever. They are not required to subscribe for tho unsecured B shares and are to he thoroughly isolated from th" Estates Company. This is taking all the cream with a vengeance. The Stair as guarantor is coolly requested to sever the Estates Company from the Bank of New Zealand by Act of Par liament, hut who is to look after the derelict a. fit r the opera t ion is not stated, though if we . t.l Mr .John Murray’s memoranda : . . . : thul. the State is ■ : . crplmii. Fi .1, of nil > 1 i Inr the unused th. Estat. * f !om pany’s debenture*. The balance of

£600,000 is to be provided by the State applying the Land for Settlement Act to some of the estates. Mr Murray »ays, “ The complete separation of the Estates Company from the Hank and the assumption by the Government of a share in its management and liquidation would he a measure wise in itself, and which the country desires to setcarried.” We admire Mr John Murray for he is the proud possessor of no end of brass ; in fact for daring effrontery in matters of this desorption he has no peer. Ho is as ready to vouch for the wisdom of the proposal as ho is to voice the wishes of the country. Does the country desire to see tho Government get further into the financial quagmire ? Mr Murray evidently thinks that a select eotorie of Bank officials is tho country. Of course Mr Murray is at infinite pains to show that the Government holds ample cover. There is the paid up capital of £600,000, the reserve liability of shareholders £1,500,000, a huge sum, but when the Government wished an immediate call to be made on this reserve liability there was some tall talk about hardships and suffering of unoffending and innocent shareholders. The fact is this reserve liability represents “ whips of stuff ”on paper. It reads well at the top of an advertisement, hut for other purposes must be largely discounted. Besides paid up capital and reserve liability Mr John Murray has discovered a sum of £500,000, which he estimates will be the future profits due to Bank of New Zealand shareholders and accumulated in ten years. Mr John Murray can make a good deal in “ futures.” He believes very much in “ difierrods,” but when all the demands that have to be met by profits duo to Bank of New Zealand shareholders are paid, the residue would searcely buyameal at a sixpenny restaurant. A very wise thing hide d for the Government to undertake th. - management and liquidation of the Estates Company upon this security, yet, aecording to Mr Murray, the country desires it. Respecting the Estates Company, Mr Glyn at the annual meeting of Hank of New Zealand shareholders in 1898 said, “ 1 was glad to be able when I event out there (New Zealand) to be able to induce Mr John Murray, who is a gen tleman of very great ability, and very well-known, I have no doubt, to many of you, to take the Chairmanship of the Estates Company and togivemor. time to it than he would have been able to give as an ordinary director. I think this will greatly benefit th. concern.” In 1894 the same Mr Glyn says the Estates Company did not earn more than sufficient to pay per cent. on the guarantei ii debenture* of £1,500,000. The poor result was not duo to any faulty management, but was earned by Government taxa tion, and if Mr Glyn says so it must he true beyond contradiction. The liquidation of the Estates Company will be found a very hard rask indeed". It must be remembered that the process of liquidation has been going on for several years, and all the marketable assets have gone. The eyes ha . been picked on , and wiiat is left will ..... realisation is iho order of the day. All the reconstruct! i Banks in Australia are realising assets, and inns, realise, for it is imperative for them to find more than 188.000,000 before the . nil of this century. The Hank of New Zealand Estates Company must suffer through this. The Government made a gigantic blunder in guaranteeing the Hank of New Zealand, and if it accepts this scheme of amalgamation it will magnify that mistak - very considerably. The final scene of this farce will he that th- Colony wi

have to take over tho whole conocrn and compensate tho holders of B shares (Colonial Hank) lor loss of income. We look to Parliament to thresh out this matter thoroughly and fully and not to allow any issues to obscure their judgment. This amalgamation is one of the most serious questions that have becomo before Parliament, for a good deal of the future political, social and commercial welfare of the country is involved in tho correct settlement of the matter. II is a good old rule that says, “ When ill doubt lead trumps,” and we think the trump card in this case is to throwout the scheme.