PROMPTITUDE OF THE GOVERNMENT.

Star (Christchurch), Issue 4739, 2 September 1893, Page 6

PROMPTITUDE OF THE GOVERNMENT.

BEMAEKABLY EAPID LEGISLATION. [PEOII OUB SPECIAL COERESPONDBNT.I WELLINGTON, Sept. 1. On account of the unexpected mid unacc<mutable run on tha • Auckland Savings Bank, the' Government to-day resolved to introduce, and, if possible, pass through all ita stages the Bank-Note Issue Bill, which was drafted during the recess, and held in readiness to ba brought in when occasion required. Thia measure ia on the same lines aa the Bank lesua Bill passed in New South Wale?, and the effect of its passage will bo to allay all tendency to panic, oc in the direction of a run upon the .different Banks of Issue in"the Colony. General commendation is bestowed upon the Government for. its prompt action in taking this-step instead of waiting: until any serious -criei3 arose. The legislation is decidedly of a preventive Had, and is passed tomeetfutare contingencies rather than a.preeent emergency. It w;ll be remembered that when the conference of Australian Premiers took place at Melbourse the Premier of New Zealand concurred in the resolution then arrived at, that legislation on the linoa of this measure should b 9 passed in oil the Colonies. The permanent provision o£ this Bill will operate to the advantage o£ tbe general public by giving- holders of bank-note 3 & preferential claim on a bank's assets, but th*3 provision operates to the prejudice of depositors. The Banks and Bankera Act Amendment Bill, which was also passed by the House to-night, will enable a weak banking inatitution to iccrsass ita capital in an emergency without the necessity for resorting to the process known aa raconatruction.' This result ia to be achieved at the cost of the existing shareholders, who have been deriving profits; but it will cause tueni loss loss than would result from the temporary stoppage and reconstruction.

[Per Press Association.! ' HOUSE OP REPRESENTATIVES. In ths House of Kapreßontatkes la3t eveniig, ' ' ' . The Hon J. G. Wahd introduced the Ba'.ik Note Issue .Bill, . to. maka ba.uk notea a first charge on- brink assets, aud to temporarily enable the Goverßment to declare cank notes to be legal tender,' hind, to provide iox (lie retirement of -th-j Laiae during a limited time and. under special circumstances. Ho fiftid be proposed t;> ask tha House.!') pass the Bill through all its fita^ea tbab night. Mr Ward, in moving tfco second reading of the Bill, eaid : —Eon mejinevs will expect some reasocs to be given by me tor asking tlco House to jillow this Bill to be put through all its etape3 this evening, I have to remind the House that in the Financial Statement indication was given there by the Government that it might bo necessary to introduce banking legislation. It was not anticipated, nor, I may say, is if now though V that there will be any actual necessity for the Bill. There are, however, circumstances which render ie desirable as a precautionary Btep that; the Government should be prepsued, if any necessity should arise, to bo able to do that which' may seem neceasary ti be in the best interests of the country. 1 think it would be admitted that when legislation upon an important matter of this kind Is introduced into this House, that there should be no such thing aa delay in passing it into law. I think t'ae reasons for that will be obvious to every honourable member. I desire to say thab thare is not, so far as the Government is aware, any immediate or possible necessity for this Bill being put; upon the Statute Book. Honourable members are aware that in the adjacent colonies for some months past a keen financial crisis has existed. This Colony has been fortunate enough to escape such disasters as have overtaken and which affected ever/ industry and every cJasß of peopi9 in our more unfortunate neighbouring colonies. Circumstances have arisen during the last day or two in the north of this Colony, which have been brought prominently before every member of this Hou3e. I will venture to say that even in a small way a financial panic in that city had not the slightest oause to arise. I r d er especially to aiun. such as is reported on the Auckland Savings Bank. That is' a powerful institution in the city of Auckland. It is most extraordinary that that run should have taken place. The institution in question is financially strong, and its investments ara sound. Tfc has been well managed, and in addition to that it has very large reeources. Nevertheless, without any apparent • reason, a small panic, a very small one, indeed, lam glad to say, has occurred there. I may state that that institution invested in the securities of this Colony the sum o? .£125,000, which, of course, I may intimate to hon members is a liquid asset, and you will at once see is available for that institution should it be required. That being so, it renders it all the more extraordinary that some of the residents of that city, from causes quite unaccountable, so far as I have been able to ascertain, have, as a result of a small panic, made a run upon' it. I have every reason to believe that that panic will be allayed without the least difficulty. I may, however, say that were itnecessary the Government would, without the slightest hesitancy, guarantee the deposits of that institution, so assured is it that its position is thoroughly and absolutely safe. In proposing this Bill, I think it is only right that I should explain so far the special circumstances that have brought thia matter prominently before ua now. Ib ia, I think, unlikely that as a result of the disturbance whica has taken place there in the financial . world., it will spread to any other portion of this Colony. I thiai that hon members will agree with me that what haa taken place .in that portion of the Colony was caused without justification, and that as representatives of. the people assembled here v/e are in duty bound to take such steps as we may deem necessary to prevent even* the. slightest possibility of the disaster spreading. I have said that this measure is one of entirely a precautionary character. If hon members will be good enough to look at its provisions, they will see that under it this country undertakes no financial responsibility or liability whatever. Hon members) by referring to the clauses of this Bill, will see at once that we do not undertake to guarantee any hank, or guarantee any bank notes. We do not, as a matter of fact, propose that this legislation, if it passes through this House, should be available by anyone in thi3 Colony unless extraordinary circumstances arise, and then the main provisions of it will only be put into operation by the Governor-in-Council. Part I. you will observe, makes that which is necessary to enable such a Bill as this ia to be effective at all. It makes the notes of all banking institutions trading in this Colony, a first charge upbii"their assets. That being so, hon members will see that if the assets of a bank are at the back of its noteß, should tha time ever arise for this Colony by Order-in-Couhcil to act under the provisions of this Bill, • under Part 11., and find it necessary to make these notes a legal tender, the Colony will undertake no financial liability, inasmuch aB the assets of a bank are the first charge against which those notes are placed. That is a very important point, and I wish the House to clearly realise what it means ; that the bank notes being made a first charge upon its assets, should it ever be necea£a.ry under the provisions of the Bill to ieaue a proclamation aB proposed in Clause 5, that then the colony will undertake no financial liability or responsibility, because it will be secured by the whole of the assets of the bank as against the note issue. In this reapect I may say that tnia legislation is assimilated to that passed a short time ago in New South Wales. There a similar provision waa put upon the Statute Book, the only difference being that they were in the throes of a great financial panic, that there waß an upheaval in every industry which concerned that colony. At the time of that upheaval they introduced and placed upon their Statute Book that which we now, without any panic ask this Eoase to assent

jto; and after ifc wai paced upon the • Statute Book the panic which existed, aud j which was of so severe a character in New j South Wales, was greatly abated. By this particular clause of the Bill, which, waa i made a permanent provision of the Act, | the colony was enabled to overcome j what threatened to be a very ruinous i financial catastrophe. That is the only ' permanent clause "tbab hon members are asked to assent to so far as this Bill ia concerned. Now, Sir, as we propose that Part 11. of the Bill should be of a temporary character only, and should eapire in twelve months, hon members will see that nothing further ccmld be done after the expiry of twelva months under this portion of the Bill, without the Government placing the whole circumstances before the Houee, and asking it to legislate afresh for the reenactment of this | measure should it bo neceaßary. It will ; also be seen, by reading the Bill, that it is ! not intended, should a proclamation ever ! be issued, io even render it possible for a | bank's notes to bo made legal tender, ! unlesH the Governor-in-Council is satisfied i that the esset& of the batik and. its credit .1 exceed it 3 liabilities by at least tiie amount of its paid-up capifci&l- and- the reserved profits. That i 6 a very ■ important ! point. There is, I m-iy say, a double | security under this Bill. The assets i of ' the bank are, in the first place, made the I first security againet its note issue j and in the second place there is the further" asP eurance that should a proclamation be ießued under the second portion of this 1 Bill, tbe Governor-in-Council .would not allow any bank, should it desire to falr'a' i advantage of its provisions, tomske.its notes legal tender unlesß itiasset's exceed i its liabilities by at least tho sum of its paid-up capital and the amount of its reserved profits. Another important point : ia that, evert should it ba neebssary .that j noteo should require to be made a legal ! tender in tuia country— and I do i not think it will—that by proclamation it is not intended that if; should be for a longer period than six months. The whole intention of this Bill is, aa I have said, to ba of a precautionary character. Perhaps in the. history of the world there never has besn 'a time when such an extraordinary financial crisis as we hara seen in tbe adjacent Colonies has taken place, and I think that, considering the strong, position . the country occupies, J and the very close association between it 3 | prosperous position and the institutions which conduct the financial operations of •every industry .in the country, including 'that of tho C4overntKent, hon meiiibfera will agree with me that the Government would be wanting in its duty to the people ' of thia' country if it did nob by legislation, ! should occasion arise, prevent &ny panic [from occurring in thia country. I may i say that, so. far as the Government is' ! aware, no financial institution in the ! Colony requires any assistance under this Bill. We have had no indication or istim&tion from any financial institution in fche country that the provisions of this Bill are necessaiy for it; but, taking the whole circunistinceß of the disturbed financial position of affairs outside the Colony j into consideration, wa do not believe thai; it is light that the great interests involved should be allowed to ruu tho slightest; possible risk for the want of doing that which reasonable men should do, so loug as we ate not undertaking a heavy financial liability for the Colony. I think it verifies whp.t I aaid at aa early pariod of the 89Bsion, that it is desirable and necessary " in times of peace to be prepared for war." Hoaourable members h;tva now had an opportunity of perusing the Bill, and if thay will look at the various clauses they will see that there is nothing of an experimental character in it. It is a Bill which is framed upon practical lines, closely assimilated to the Bill paßsed by the New South Wales Parliament some two months ago. The House, if it places thi3 measure upnn the Statute Book, will have paseed an Act, which, so far as this subject is concerned, is upon all fours with that which was found to ba necessary after a severe panic had arisen ia the Colony of Now South Wales. I repeat that so far as we can sco at present there is no likelihood of this Bill being required ; but I also repeat that in the opinion o! the' Government it is necessary and desirable that the Governor-in-Council should have the power to take such steps as are proposed in this Bill to prevent a panic from arising in this country. I would go further, and say that if the other Colonies — New South Wales, for instance — hid placed auch a measure on its Statute Book a few months sooner than it did, tho great financial disaster, the great disturbance of ■ trade that has taken place ia that Colony, would have been averted. In tbafc belief I think, we should be guided by the experience of onr neighbours, and not allow time to pass by, but to take it by the forelock, and place upon the Statute Book an Act which I venture to say may in the future ..be of considerable value to this Colony. This, I may say, ig in no Bens 9 a party matter. I am glad to know that hon membera on the other side of the House, equally with those on this side, are animated by a common cleaire to do that which, under the circumstances, they believe to be for their country's good. In the belief that tlm measure is necessary, and that it has received the careful consideration of the Government, I say I would ask the House to assist the Government in preventing the Colony from coming even to the verge of anything like financial troubles. I believe we will entirely escape any financial troubles in this Colony, but at the same time I think the House will be doing wall to enable the Governor-in-Council to take advantage of such proposals as are contained in thia Bill, should they ever be necessary. I beg to move the second reading of the Bill. Mr Eollestoit said the Colonial Treasurer had put the case very clearly. The Government was taking great responsibility, and the Hou-ia should support the Government in taking that responsibility. It was not as though the question were new to any of them, as it Lad occupied the minds of all. thoughtful -men for months past. He considered that.it would not be prudent ■ for • the House to- dissolve without passing legislation similar to fcbab passed by the other Colonies. He did not think there was any • caut.e at all for panic, . but the wisest of men could not tell what might happen. It was, therefore, wise on their part, to I adopt the legislation passed by other S Coloniea, and for his part he waa prepared ! to Bupport the Government in the action ib was taking — action which wqb taken aftar careful enquiry and with a full senEe of the responsibility. The second reading was agreed to on the voices without further remark, and the House went into Committee on the Bill, j which waa passed without amendment, read a third time and passed. BANKS AND BANEEBS BILL, The Hon J.G. WASD.thea moved the second reading of the Banks and Bankers Act Amendment Bill, to authorise Banks to increase their capital on an extraordinary ' resolution of the shareholders in that behalE. H« briefly ex plained- the provisions of the Bill, and hoped that the House would agree to it. ■ The Bill was then committed, read a third time and passed.