THE FINANCES OF THE COLONY.

Thames Advertiser, Volume VIII, Issue 2171, 12 October 1875, Page 3

THE FINANCES OF THE COLONY.

MR BRIDGES BEFORE COMMITTEE. The following are extracts from the evi-! dene'e given by Mr Bridges, Director and Acting General Manager of the National Bank, before tho Public Accounts Committee, in reference to tho banking; arrangements of the'colony.'" In consequence of Mr Bridges'-refusal, to fully explain matters, he was,ordered.to attend at the bar of the House yesterday. The extracts afford a general idea of tho line of examination adopted, and the evidence given. The examination lasted several days, and the evidence is very volume nous.—Mr Bridges said that the 1 per cent, on interest, in London has been reduced to f per cent.below the current Bank of England rate. There was no arrangement previous to this. Looking: to that agreement generally, I do not consider that a'.fair and reasonable arrangement exists between the Bank of New Zealand and the Government. There are two important omissions—one is as to the transmission of money from London to; the colony. The present arrangement is most unfair. By it are purchased here at -j per cent, discount for b'O days' bills. At present, in London, the ordinary banking rate for tho sale of drafts on the colony, which amounts to the same thing; is sixty days', sight at par, and on demand li per cent, premium. The money would be paid here on demand at par, and.if at sixty days' sight the Government would obtain If per cent, premium. Of course they-would lose the interest for the time, but that would not 'be an equivalent. The 2f per cent, interest is not so good as the 1| per cent, premium for sixty days. I may say that the fact of the Government keeping its account in one bank must necessarily have that tendency, and the Government must be, to a certain exr tent, in the power of that bank. In my opinion, if the Government gave its account to an association of banks it would tend to avoid the creation of certain political,power', which must, of necessity,be'enjoyed by any one bank which possesses the Government account? No. It is within my'personal knowledge that the arrangement made with the Batik of New Zealand was a badone for the colony. I allude especially to the million and a-half which was lodged with the bank, and which it was understood they would have for a fixed period of six- and twelve months. The Government might have obtained for that money from the banks in London at least 4 per cent, The* rate for twelvemonths'deposits'varies from 4. to 5 per cent.; the best London banks give 4 per cent., and the colonial and. Indian banks from 4 to 5 per cent. That is irrespective of the Bank of England rate. The Government are gelling with the bank rate'as it is only 2£ per cent., in consequence of the fall of the bank's rates. From the associated banks they would have got from-4 to 4? per cent. Supposing the £1,500,000 referred, to in l he loan papers had not been placed w'ith ihe Bank of New Zealand for six months certain, but with the banks in Lombard-street, the New Zealand Government would certainly have received at' Jeast 4 per cent, for r fixed deposit. Just before the loan was raised, and when there was. some doubt whether it could be raised or not, the Bank of New Zealand found it necessary to put pressure upon the public, and a good .many people were injured in consequence. They were members of the mercantile community of the colony.' This was especially the case in Christchurch.—'By the Chairman: I understood you also to Bay that you'were aware that on one occasion the Bank of New Zealand has put pressure on the Government to the disadvantage of the colony ? Yes, but I would father not state the circumstances. Pressure was put on in Christchurch, because their advances were so large thst if the loan, had not been raised would-have been in a

.difficult position,' The bank itadl made these heavy advances in anticipation of the loan -being raised ; and when they thought that it might not be raised : they put the pressure on." They calculated gating the. proceeds of the loan,—The inquiry rested/.here, until .a,fortnight later a letter was received from Mr D. L. Murdoch,' in which he' said :~"'My directors quite concur in the opinion you express,.that general statements such as appear to have been made by Mr Bridges are .prejudicial to the interests of the •public service,: and not only relievo Mr Bridges- from : 'any secreoy on. the subject, but desiro mo to express a hope that you will ■ compel' 'him to make ' the fullest disclosures." Mr Bridges was again called before the committee, and after an assurance that he would not be open to anyaction at lawby the bank, he entered fully into the transaction between the Weld M inistry and: the bank. He then referred to the purchase of the Port Chalmers Bailway, and* •said that purchase would not have been made at the price it was but through pressure put by the bank on the Government,' the bank being' largely interested in it. The railway would, perhaps, not have been made but for. the bank.—The railway was a private undertaking—was itf Yes; the money, or a large portion of it,_ being advanced by the bank. I heard Mr Bathgate, who was a member of the Ministry at the time, say he would not consent to such an exorbitant price being given for the railway, and it was one of the most profitable.operations the bank,had had,-What consideration did the Government get for giving this, high price ? That is a question of opinion.— ¥ou cannot tell the committee where the pressure was brought Jo bear ?■ You have stated the fact that in your opinion the Government yielded to political pressure. Can you form any idea of how that political pressure was exercised? Yes.— What is your idea P I decline to slate that. When you left yesterday, you objected, I think; to give some specific information 1 , because your answer" would extend beyond the ; .bank," and you wanted to be quite clear.as to the course the committee would adopt in reference to your evidence in that respect.' The committee have' deliberated. Their opinion is that all the protection they have the power to give you will be given. I understand. .1 'do not think that it is sufficient to protect me,,and therefore I have no further evidence to offer.