Poverty Bay Herald.

Poverty Bay Herald, Volume XVI, Issue 5463, 1 May 1889, Page 2

Poverty Bay Herald.

PUBLISHED EVERY EVENING GISBORNE, WEDNESDAY, MAY 1, 183 D. THE BANK OF NEW ZEALAND. The report of the directors of the above institution read at the meeting yesterday should be pleasant reading for the sharehoi lers, and also for the people of New Zenland. The sound position and prosperity of the principal monetary corporation of the colony ia a matter for general congratulation. This should be fully recognised when it is kept in mind that the recent heavy losses of tho Bank were primarily brought about by the long-sustained low prices obtainable for the colony's products, and consequently great depreciation in the value of land, in which so much of the Bank's capital was invested. It may be urged that it is not the proper businesss of banking institutions to make advances by way of mortgages on land, but in this quarter of the globe the conduct of the Bank of New Zealand has not been singulur in that respect. The trouble arose through the operations of the Bank being very much confined to the colony where the depression was most severe in the value of real estate. The principles which obtain in England in the conduct of banking institutions were never adhered to in these colonies. We arc convinced that many a long year will elapse before these principles can be put fully into operation in Australasia. The reasons are not at all strong against the colonial method of doing business. Banking operations would shrink into small dimensions in these colonies wore transactions limited to what is supposed to be legitimate business. The Bank of New South Wales is a notably sttong institution, and it lias had such a long career of success that it would be next to impossible to draw a comparison to its di-ad vantage, but a recent civil action at the Supreme Court shows how that eminently respectable and cautious monetary corporation, with the wisdom of age*, made large advances on land to which even the title was not assured. To use a common expression all the Banks have been tarred with the same brush, but the Bank of New Zealand got its fingers bitten through having been more enterprising than the rest as far as this colony was concerned, but it is only fair to admit that I lie local institution has done more to develop the resources of New Zealand than all the other Banks combined, and relatively to the number and amount of advances has wound \\v fewer people. It need not be claimed thai the consideration so often shown was induced by concern for the interest of the individual debtor, but it was in pursuance of a general principle. The welfare of the Bank of New Zealand entirely depends upon the welfare of the colony. Anything which brought about a state of general financial distrust would particularly affect the Bank, apart from direct loss. One of the most creditable and public-spirited actions in the history of banking institutions in these colonies was the forbearance of the Bank of New Zealand at the time it fully dawned upon the managers that an inordinately largo proportion of the advances were not covered by the securities. However, the objectionable proceeding should not be overlooked of the Bank declaring dividends which were not justified by the earnings, after provision had been made for depreciated securities. The colony has not suffered from that action, probably has been the gainer, for if the position had been faced years ago a great many persons would have succumbed whose prospects are now brightening owing to the improved times. The earnings of the Bank of New Zealand during the past year were equal to close on nine per cent, per annum on the subscribed capital, and a dividend was declared at the rate of seven per cent. The directors are hopeful that the next half-year's business will give a better result, and it may be assumed that their anticipations will be realized. In a comparatively short time hence the large dividends of previous years may be repeated, but nobody but tho shareholders should desire anything of the sorfc. These large profits must come out of the pockets of the public generally, and there is no substantial reason why banking institutions in the colonies should expect more than double the dividends earned by similar concerns in the Old Country. This is an aspect of the question which there is no need on the present occasion to discuss at any length. There has been a full revival of confidence in the soundness of the Bank of New Zealand, and that is a fact which has a very important hearing upon the developmentof the resources of the colony.