THE BANK OF NEW ZEALAND.

Wellington Independent, Volume XVI, Issue 1682, 5 November 1861, Page 2

THE BANK OF NEW ZEALAND.

/To the Editor of the WeUington Independent.) Wellington, 4lh November, 1861. Sin,—ln your issue of Friday last, you devote a leading article to the consideration of the suhject of a local directory for the Bank of New Zealand here, and differ from the views put forth in my letter which appeared iv your publication of the 22i)d inst. You appear to believe that mercantile directors would iv the ciroumstances be most suitable for the interests of*tbe Bank here, but in discussing the subject you have entirely misconstrued my reasons for holding a contrary opinion, and combated arguments which I never used, or (beamed of using. I stated my conviction tbat the appointment as Directors of those engaged in commercial pursuits would retard tbe progress of the institution here, and thai it would be more successful if managed by an Inspector and Manager under the General Board, or by Diieclors disconnected with the trade of the port. To these opinions I still adhere, and a further consideration of tbe subject and your article, have only strengthened and confirmed them. To say uothitig of the dignified position a man would occupy, being called upon to decide whether paper which perhaps bears his own signature, is such that the Bank ought to dis count, I hold that a mercantile Director would have an improper advantage over all others engaged in the same description of busiuess, because from the private knowledge obtained as Director he would know the position of every trader in tbe place iv regard to monetary affairs, and in the event of any of thera getting iuto difficulties, would atoucc kuow when to cut short his transactions with such an individual, while tbe other creditors would have lo bear their own, and his legitimate share of the loss arising on the insolvents liabilities. I think besides, that a still more serious drawback attending the appointment of commercial men as Directors, would be that the Bauk would not obtain the same proportion of business and support, that it would do with non-mercantile Directors, or by dispensing with such officials altogether. Not that I suppose the Directors would refuse the business, hut that it would not be offered to them. When I last wrote it was as a shareholder naturally anxious for the success of the Bank, but I believe tbat that portion of the public who are not shareholders would never become customers of the Bauk if they were as liberally treated by the rival institutions, and that many of the shareholders would feel as I would do, that rather than have their transactions overhauled and their private business exposed to rival traders, however honorable and competent they might be, they would prefer doing their business with a Bank in whose dividends they felt no personal interests. But while these were my views I did not " infer that mercantile Directors would rather keep the funds of a B ink idle thnn loau them to parties pursuing business of the same nature as their own," nor, am I one of those, who " speak and act as if Banks, even when there is abundance of capital held by them, were at war with the pi'blic and did uot wi-di to make it "loans," aud I cannot see where you could possibly find a single word in my letter to warrant your arriving at any such conclusion, Ou the coutrary it appeals to me to have, as I intended it sbouid, an entirely different ten dency. Every schoolboy kuows tbat it is hy lending their capital on bills and other securities, that Banks pay their expenses and make their dividends, and that if they stopped doing so tbey might shut up. And my opiuion was that "in a community like ours" where, as you say, " the bulk of the Bills will be offered by the trading class," very little business of this description would he brought to the Bank on account cf the reluctance of the merchants to shew their transactions and that of their customers to those prosecuting tbe same pursuits. I quite agree wiih you that security " must be the object of a Bank honestly conducted for the advantage of the shareholders"; but your idea of having as many local directors as possible, although it might be very good and safe for depositors, would, I fear, make a melancholy ap-

pearance in pioducing a dividend. Did you never hear ol the story of a Bank Manager not 500 miles from Wellington, who, when boasting of his having made no bad debts, was asked by the Inspector where were the profits ? Yon Rtttc that >ou " need hardly point to the number of persons beloogiog to the commeVcial class who act as Directors, to show that this ! class is usually selected :" and that you "sus--1 pcet it would he found on enquiry to be mainly owing to their being associated with pursuits, in connection with which the larger portion of j the Bill transactions of colonial Banks takes I place." Now, I maintain that in respect to local Directors, you have utterly failed to make out that such is the case. The management of the three Bunks named hy you, viz :— -The Union, Oriental, and Bmk of New South Wales, which have or have had branches here, and which from their experience ought to know the best mode of conducting the banking business of the various settlements of this Colony, po to prove they hold quite a contrary view to thnt you support. The Union Bank is in the habit of appointing local directors, but oan you poiut out an , instance in wbich such were ever engaged in Commercial pursuits in the place where they held the appointment ? Atid ie it not evident that the Union Bank finds gentlemen disconnected with business most suitable as Directors, or if not, why does it not appoint mercantile men ? The Oriental Bank, which is one of the most powerful and successful hanking companies of the present day, never hail a director here, and ignores the system of local director's altogether. The Bank of New South Wales, which was started in the same way as the Bank of ' New Zealand, has not appointed nor docs it intend to appoint directors at any of the New Zealand Branches, clearly shewing that it considers it adverse to itsiuteresls to have such officials. I dv not quite understand what you mean by "secrcsy in Banking," respecting which, if I am a friend of, you " ure necessarily at issue with" me. If the mode you approve of, is, to have as many Directors and the transactions of tbe Bunk made as public as possible, then I must candidly say I am no " friend" ofsucha system. And I think it requires veiy little knowledge of the world and its affairs to predict, that a Banking establishment which kept the accounts of its customers and a register of its Bills open for puhlic inspection, would very soon have no accounts lo keep, or Bills to discount. I remain, Your most obedient servant, Shareholder.