Taranaki Herald. THURSDAY, FEBRUARY 19,1903. THE BANK OF NEW ZEALAND.

Taranaki Herald, Volume L, Issue 12195, 19 February 1903, Page 4

Taranaki Herald. THURSDAY, FEBRUARY 19, 1903. THE BANK OF NEW ZEALAND.

When Mr* Seddon was here last week 'he annbuiicpd that during next session of .Parliament legislation will .bo introduced dealing with the . £ank of New- Zealand. This ' is, rendered necessary by the fact that in 1904 the State guarantee, "fco"*£he Bank Tvill expire. . D,uring iihe session of 1894, it .will, be remembered, Parliament jaid the colony w,ere startled to learn that the Bank was' "in such a position that unless the \State guaranteed a sum of d&2,000;000 the .institution- would* be obliged, to olose'its doors. With ' a boldness ■ and- 1 wisdom whicK- r did it* credit the .Government saved the situation, and aT very serious financial disaster was averted. : A cbnditipn of the assistance, given was XJaat - the State should -have controlling' "power 1 on 'the directorate, of the Bank. (The appointment of sagacious men to- the position has -'.resulted in the Bank gradually recovering itself and the last two balance-sheets w haVe shown handsome profits, , while there is every indication that this satisfactory 'condition of things wilKbe fully maintained; Share's whioh at the time of the crisis were worth about 10/ are nowf quoted , v at about. #*t ; i-10/s' >Of its own capital the" 'Bank*> has only some ' £420,000, and upon,' this and the £2,OOO;O0O, 'guaranteed, by tjie State a profit of £300,000 per annum is now being made, or about 12£ t per cent. The Bank pays 4 per cent to the State for the accommodation given^~so that' it "is making, a large profit on the; transaction^ ' The guarantee,, however, as stated above,, expires next, Year, and the question will arise whether it is to be renewed and upon' what terms: Mr Seddon told his Auckland' audience op Tuesday evening that, he djd , ; iiQt> think the State's control should cease, but the Lyttelton 'Times, < writing- 'the r - other day 'upon the' question', *%aid, < that the idea 6i renewing' the r guarantee in its present shape is' quite <fut pf the question. The Bank must be prepared either 'to "stand on 'i^'own, feet or to admit the' public into*-an equitable partnership; It? must,, to put " it, plainly 1 , either i -Bnance..€tself"Or, , become a State. institution." The colony, we imagine, 1 is not prepared to adopt the State bank id&Xyet awhile, and en the other hand itwouid be rather a risky tiling to, , withdraw, the moral .and material' support whrehjihe institution has, • received for > the past nine years from tb.6 State. Our con-

temporary agrees that no arrangement would^ be satisfactory to the public which.* left the bank free to drift agajix. into ihe deep water from which rescued nine years ago. TKe simplest,- safest, and most satisfactory way ,to secure against such a calamity would be to continue the existing . arrangement for a further term, with a condition that dividends payaljle to snjareholders shall ' be strictly^ limited as , long as the State guarantee exists. < The. gjiarai^tee cp'sts •the State .no'thing.."^and?it is a1;a 1 ; pubji^ benefit in- that it ehsures the general financial stability' Qf " the commercial community haying the Bank of New Zealand as- its centre.! A crisis occurring in connection with,, the ,IJank to-day would havfe a wideilySdisasjirous effect, and, is to [' "be guarded " against by every reasonable means. " It' is quite possible the bank is strong enough to : /stand alone, but there £s no harm in lotting,, the" Stale prop remain a little longer. The only objection "that w.e. can,'sees f is#hat'itinay enable private speculator^ to ihaive large profits out of share transactions but some safeguards can*4ure*ly" be -de-, vised to prevent thist $0 some extent, say by the restriction of 'dividends payable. Until the colony is prepared to take up State banking* weS db not believe ib the guarantee being ' converted into Bank capital, the colony thus beepming a*, partner^ anrthe^ Bank^ but we- ceftainly 1 do" agrle thai? ''the' Government, as long as it is behind the Bank, should retain- corttrol.' ' The management ,\ during, last few years' Has >rbeen t admirable, ,and -. it would be a pity to introduce a *dis-- , turning element as> long a^.this state* x of things continues/ Iv> '"'""'